An adviser who has been in the industry for 25 years plans to retire. The business is mainly composed of pre-retirees and retirees.
Income is made up of:
Fee for service approx. $482,000
Annual consultative work $18,000
Total annual Income is approx. $500,000
Insurance renewal commissions Nil – fully rebated
Client fee payments
Clients are invoiced and pay by monthly instalments via product or Bank Transfers from Macquarie Bank and BOQ. A few clients may pay via invoice in May /June as this is more tax effective for them. All agreements include CPI annual adjustments.
Client distribution
There are 88 clients under active ongoing agreements in the business. Roughly 90% of the clients are in NSW, predominantly Mid North Coast, 5 clients are in Qld, 1 in WA and 2 in SA. There are multiple family groups of multiple generations.
Client types
The make-up of the client base is Retirees. The clients that are still working are generally on above average incomes, work in caring industries such as nurses and allied health, not for profits as CEOs/management.
18 – 33 | 6% | 34 – 43 | 19% | ||
44 – 53 | 43% | 54 – 63 | 28% | 64+ | 5% |
Support staff/AR’s:
Owner’s husband manages the Term Deposit portfolio with AMM ( Interested in retiring)
The business partner manages the APL and Research. He is interested in retiring There is a 20hr per week part-time Bookkeeper/Centrelink/Client liaison officer There are 2 Full time staff with VA Platinum in the Philippines.
- Staff Member 1 has completed a paraplanning course – Xplan ( 5 years experience)
- Staff Member 2 does admin/ Xplan/Myprosperity/Fin 365. ( 2years experience)
Platforms:
- Netwealth is preferred
- Australian Money Market
- Hub 24 for smaller portfolios
- Historical Asgard and BT Panorama
Implemented Portfolios, Morningstar Portfolios and our own model portfolios (as appropriate for clients) are used.
Preference for ETFs, index funds and Term Deposits
Records storage system:
- Records in One Drive.
- Using Fin365 for workflows and File Notes – integrates with Office 365.
- Myprosperity for Client communication and copies of records
- Xplan for document production of SOAs/ROAs and review documents
FUM under the AFSL
Is split between advice and no advice.
The business recently completed the PI application (no complaints or outstanding issues) and Xplan extract indicated FUM was $79 million.
Not all of this is under advice.
An Historical trading entity gave investors the opportunity to purchase managed funds without advice and the upfront commission was rebated.
As an example, there are 20 connections with approximately $6M in FUM with CFS. 11 of the 20 have balances of over 100K.
No income is currently produced, they are considered ‘orphan’ connections.
Potential
The Adviser is an SMSF specialist and has several accountancy connections that refer business for SMSF SOA establishment and ongoing investment guidance.
Property is a strong interest of clients, and we do not currently provide any services in this area.
The Adviser is and Accredited with Aged Care Steps and receives Aged Care Advice Referrals from other advisers in the area due to training and experience.
The Adviser always places a heavy emphasis of building connections with the children of the clients and also spouses that are usually ‘hands off’ so that the business continues to grow.
There are several family groups and Clients with multiple entities.
As the adviser is not interested in writing insurance it hasn’t been a focus. But if this could be referred to someone else in the business, growth would be achieved.
A low-cost service option for the clients’ families (but with a personal connection) and including a service like Myprosperity would be a huge opportunity for the next generation and also for the connections the client has through “women in business”. Due to capacity issues the adviser has focused on a higher fee bracket.
Connectivity with clients
With a retiree focus, the owner has developed a system where they collate significant spending the client has done in retirement, such as world trips, BMW’s and house renovations. The business tracks the clients annual drawdowns from their superannuation as well.
Over a decade this system shows a client they have ‘lived their goals’. “This is my retirement”. The document is based on a personalised spreadsheet. It also shows the accumulation years and progress. This document sits alongside a ‘Personal Wealth Tracker’ that captures bank balances and Investment Balances which leads to conversations around… “I spent that amount, and I still have this left to support me”.
Conditions of acquisition
The vendors are willing to talk attractive terms for the purchase with an upfront investment, reasonable handover protocols and standard run off provisions for the right cultural fit.
- The vendor is looking for 3.10 times RR with at least 85% up front with the balance within 2 years
- They are willing to remain with the business for 2 years and actively grow the business, if able to work part time and be released from day-to- day management of the AFSL.
Preference will be given to acquirers with approved funding in place rather than a contract that is “subject to finance”.
All negotiations are subject to a signed NDA with the vendor prior to the release of any data.
This is an ideal opportunity for someone looking to acquire a ready-made business generating substantial amounts of income from a loyal client base with excellent referral systems.
For more information and a prompt introduction please call Jim Prigg on 0408 520 453 or jim@knowledgemaster.com.au