Connect Financial Service Brokers (Connect) CEO Paul Tynan has observed that nationally here are still more buyers than sellers for accounting and financial planning businesses – a trend that has been consistent for the past five years.
“Within the financial planning sector the overabundance of buyers for planning businesses is due to the structure of the financial advice sector where six very large institutions control 85% of licensees.
“However, recently I have seen a spike in enquiries from planners looking to purchase books of clients outside of their institutions because the pricing and quality of internal books”.
Paul Tynan has also been called on to coach and mentor individual planners operating within the institutionally owned dealer groups as they are keen to learn more about the non-aligned sector and the differences / advantages of each.
Although demand has, and continues to be very strong for financial planning businesses, prices have remained stable with one very marked difference observed Paul Tynan. Due diligence has increased substantially with prospective buyers undertaking rigorous analysis of potential acquisitions compliance framework, office systems, staff and business compatibility.
Within the accounting sector there are many potential sellers of accounting businesses. However the accountant owners lack the level of confidence and knowledge when initiating the sale or merger process.
“Accountants are time poor and although very competent at taxation, compliance, recording, reporting, etc. have very little understanding of the steps required to achieve and maximise outcomes from the succession planning and exit process – an area that requires specialised skills and insights”, said Paul Tynan.
“This has immense ramifications for SMEs as they rely so heavily on accountants for technical assistance but they lack the same competency in the provision of succession planning advice”.
Over recent months, Connect has been approached by a number of accounting businesses seeking to expand their client offering with financial planning. The key to Connect’s successful accounting / financial planning sale, merger or acquisition activities is an extensive database of buyers and sellers from both sectors together with Paul Tynan’s personal experience and expertise from operating in both industries.
This trend is on the increase and Paul Tynan is adamant that the future will see a marked upsurge in accounting and financial planning advice disciplines merging under a professional holistic advice firm structure. “This trend will be driven by competition, long term business sustainability, demand by clients and delivered via a greater reliance on technology and advances in communication and engagement processes”.
Other benefits of mergers or closer alliances / interdependency and working relationships between accountants and financial planners will be –
. More succession and exit options and opportunities for the principals.
. University graduates and quality staff will be attracted to the larger broader advice businesses as they provide professional and personal growth prospects.
Although due diligence, compliance, technology, location, systems, etc. are all key components that must successfully interlock to maximise the potential for success of a merged enterprise – the new venture will invariably fail if the two groups aren’t a cultural fit!
“Too much energy has and is being expended on the negatives of FoFA / LIF for planners and the expiration of the SMSF exemption for accountants on July 1. The reality is the future is very bright for those accountants and planners that seize the moment and embrace this new professional advice era.
“The steps needed for a successful outcome are simple – seek professional guidance, do your research and be patient making sure the cultural fit is the key ingredient”, concluded Paul Tynan.
