News
www.fsadvice.com.au Volume 17 Issue 01 I 2022
Uptick in demand for retiree client book
Virtual meetings to dominate Financial advisers will continue to host virtual meetings with clients in 2022 but the majority are eager to meet them face to face, a new survey shows. The global survey of 400 US-based financial advisers found that video conferences are expected to increase in the next 12 months, but 88% of advisers will make more of an effort to increase in-person client meetings. The survey, conducted by US fintech Broadridge Financial Solutions and the Financial Services Institute, reveals that 51% of advisers still conduct formal client meetings either via phone or video conferencing. Should the technology improve, most advisers believe that the client acquisition process will also get better as they will be able to reach prospects outside of their geographic location. LinkedIn (77%) and Facebook (67%) are the most widely used social media platforms by advisers. Similar to Australia, the survey found that crypto and ethical investing, as well as the need for financial literacy are on the rise in the US. The low interest-rate environment is forcing investors to find better returns; 64% of advisers are seeing increased interest in cryptocurrency from clients. Further, 33% see an increased interest in ESG investments from clients. “With the rise of DIY investing and clients’ growing interest in branching out to new asset classes, financial literacy is of the utmost importance and advisers have a clear role to play,” FSI president and chief executive Dale Brown said. fs
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Karren Vergara
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The quote
In 13 years since the GFC, prices have moved up for the first time.
he demand for client books with a Baby Boomer demographic is increasing among those looking to acquire a financial advice practice. The December Radar Results reveal that near-retirees or retirees are highly sought after by financial advisers. Valuations for investment and superannuation clients aged 65-79 years old have increased to 1.7x to 2.3x (previously 1.7x to 2.2x). Those aged up to 64 are priced at 2.2x to 2.8x (previously 2.2x to 2.7x). For 80 year olds and over, multiples are at 0.80x to 1.0x. Demand for risk clients however, remained static and in line with March valuations. Risk clients under 55 sit at 2.2x to 2.7x, while those aged between 55 and 60 are valued at 2.0x to 2.3x. Those aged 61 and over have multiples of 1.0x to 1.5x. Since the March 2021 price guide, activity in selling and buying financial planning businesses has been frantic,
Radar Results founder John Birt said. “In 13 years since the GFC, prices have moved up for the first time.” Demand for licensee groups of 50 to 200 authorised representatives to be acquired by one bulk purchase continues to be evident. On the mortgage broking front, Radar Results found a steep rise in the price multiples buyers are willing to pay. The multiple for annual trails rose 13% from May 2020 to March 2021 and another 20% to December 2021, and now sits at three times the annual trails. “If the number of home loan books for sale from the major aggregators continue to be scarce, prices may rise further,” Birt said. “With house prices up 40% in two years and approved loans up a similar level, upfront commission on the new loans has also risen, which is why loan books are not coming onto the market. Trail commission on the new loans and the upfront commissions are keeping sale stock low.” fs
AMP reports $252m loss While AMP’s financial advice and wealth management units show signs of recovery, the group ultimately reported a massive $252 million statutory loss in its full-year financial performance. Underlying net profit after tax, however, was up 53% to $356 million, boosted by AMP Bank earnings and the release of provisions, together with performance fees earned by AMP Capital. AMP’s Australian wealth management business, which comprises platforms, master trusts, and SuperConcepts, reported a $48 million underlying profit, a 25% drop year on year. The division saw $5.2 billion in net cash outflows, an improvement from the $7.8 billion lost in FY20. The master trust business had $62.9 billion in AUM, which was $2 billion higher than FY20. All in all, total assets under management increased 8% to $134 billion, driven by improved investment markets and a reduction in net cash outflows. The North platform saw inflows from external financial advisers increase by 18% to $1.3 billion.
SuperConcepts, which services 41,754 SMSFs, recorded total assets under administration of $17.4 billion. AMP chief executive Alexis George said there are positive signs in the platform business with North AUM growing from stronger market performance and higher inflows from the external adviser channel. “[This] is a key focus of our strategy and is being supported by ongoing enhancements to investment choice and functionality, and competitive pricing,” she said. AMP also announced that AMP Capital has changed its name to Collimate Capital as it steps closer to finalising the demerger and listing on the ASX by the end of the year. “Collimate is a scientific term that means to make rays of light perfectly parallel. It is a metaphor for alignment, clarity and precision, which speaks to our vision and expertise in long-term value creation for our clients,” AMP Capital chief executive Shawn Johnson said. fs
THE AUSTRALIAN JOURNAL OF FINANCIAL PLANNING•
