Financial Planners Business Valuation

Financial planners have been put under the microscope recently by the federal government senate inquiry into financial services.

The effect of the inquiry on financial planners has been a shift away from trailing fee income from the lending institution to a business model built around an annual fee charged to the client.

The trailing fee model which has traditionally been used may be radically restructured or may be phased out entirely. Charging a customer an annual fee by a financial planner tends to result in the consumer subconsciously auditing the financial planner’s value each year, whereas a hidden cost buried in the fund manager’s annual percentage fee was less likely to be scrutinised by the customer.

This change is likely to make the financial planner’s fee baseless “locked in “, which in turn suggests the earnings multiples previously achieved when the financial planner’s businesses were sold may not be sustainable into the future.

They are still excellent businesses and deserve a strong price for the goodwill contained within their client bases, but perhaps not as much as the three times to three point five times trailing fee income enjoyed during the first decade of the 2000s.

Read other articles

Rent Roll Valuations

Rent roll valuations are one of the most common valuations done by Business Valuer Network members. We value many real estate practices each year and have a broad database of

Real Estate Agency Business Valuation

Real estate agents often sell their business or sell the rent roll which forms part of their real estate agency business. They sell their rent roll because they take the

Trades Business Valuation

Trades businesses are commonly bought and sold in Australia, but with some difficulty and at low price-earnings multiples. Why? Well, there are some barriers to entry to ownership of a

Medical Business Valuation

Medical businesses are a specific niche area of business valuation and there are very few business valuers in Australia who specialise in medical. Businesses which are deemed to come under

Cafe Business Valuation

Cafes are one of the most popular business categories in Australia. There are thousands of cafes sold every year. They are sold in such numbers because there are so many,

Mortgage Broker Business Valuation

Mortgage brokers have enjoyed a decade of prosperity in Australia with a booming housing construction market together with handsome trailing fees being paid to mortgage brokers by the banks and


The contents do not constitute legal advice, are not intended to be a substitute for legal advice, and should not be relied upon as such for any purposes. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have.