Getting real on value
There is a significant shift underway within the ranks of the financial planning profession. Along with significant regulatory change under FoFA, there is likely to be major consolidation in the sector over the coming years due to a number of factors.
The average practice owner in Australia is likely to be in their early 60s, and looking to either sell up and move on soon, or transition out of the practice gradually through other means over the coming years. These practice principals have put a lot of time and effort into building their business and client base over the years, and it’s fair to expect a reasonable return when owners do move on.
Pre-GFC, it would have been reasonable to expect multiples of 3x and above for a good practice. However, times have changed, and banks and larger firms are much tougher in recent times when it comes to negotiations and offerings. Anecdotal evidence would suggest that the some principals’ perceptions of what their practices are worth are out of step with reality. It’s a harder, tougher and more competitive market.
While valuations and methods for valuation may change, the fundamental basics of practice value do not. Creating and communicating value is a cornerstone of practice value. It is worth taking the time to get up to speed on ways to improve the value you deliver to clients, and either engage new clients or re-engage inactive clients with a strong unique value proposition.
This is what No More Practice is about. In the end, you and your practice can only benefit through better value on all fronts.
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