When I started No More Practice Education (NMPE) as a reality television show well over 10 years ago, The Investment Series 1 was based on following the sale activity of two advisers - one selling their business completely, and one selling “d” grade clients, who were not paying a fee for service.
Both advisers sold their businesses successfully. They were judged by a panel of experts and guided by brokers who helped them achieve maximum sale price. These prices were well over three times reoccurring revenue, and there were multiple buyers for both businesses right up until the deal was done.
Who could have predicted that in 2019, there would roughly be one buyer for every eight sellers of a financial advice practice. Or that grandfathered commissions are now holding zero value for buyers of practices. It’s a whole new world for advisers wanting to run a profitable business that one day can have its value truly realised by selling.
Anyone who has built their own business knows how much blood, sweat and tears goes into building it. And that it is the dream of most people to one day realise that level of work with a sale price commensurate to the effort put in. I went through this myself last year with the sale of NMPE to OneVue. And while we never want to put a number on something that means so much to us, at the end of the day a number - which represents what a buyer thinks your business is truly worth, is what we are left with as reward for our efforts.
I have been incredibly lucky to be able to stay on at NMPE as the editorial director, and still create stories I love, highlighting the great work in the advice industry with my production company evolution media group.
As someone who has worked with many advisers over the years, and created education for them around building practice value, I find it incredibly sad that many advisers, who have worked hard to build their businesses, will be left with an end value that is so much less that it would have been even five years ago. It seems that our advisers in The Investment Series 1 got their timing right and got out before things became incredibly complex.
While I know that not all advisers will be leaving the industry, and many are financially thriving in their practices running fee for service businesses, I do know that pretty much all advisers are feeling the heat, with the pressure of increased education standards, not to mention the constant negative publicity post Royal Commission.
It’s a tough gig to be in at the moment, and with fewer buyers than ever before, I don't imagine it will be any easier over the next five years, as the industry unravels its existing models and new ones emerge.
While long term there will always be a place for quality advisers, the short term is incredibly challenging for good people running - what essentially is; a small business.
So if you are feeling tired, you are not alone. Take heart in the fact that ultimately the service advisers are offering is desperately needed by Australians. And as the saying goes, “so too this shall pass”. Because at the end of every dark tunnel there is a light.
We are working hard to show Australia exactly how good you are. Stay tuned next month to see the results of our latest program - which will have more Australians than ever before seeing exactly what value great advice can bring to their lives.
While it may feel like it, you are not alone. We are there with you.
Until next time,
The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here.