The market is ripe for financial planners to sell their practices despite the global credit squeeze, according to a specialist banker.
“Now’s still a good time to get out, if planners are thinking of getting out,” Commonwealth Bank Australia (CBA) market specialists head Stewart Creighton told InvestorDaily.
“There’s still significant demand for financial planning businesses, so they’re still able to exit at a fantastic multiple of their earnings.”
Since opening in October, CBA’s specialist financial planning banking division has created a substantial pipeline of business.
Borrowing to purchase books of business is most common among financial advisers, then borrowing for merger and acquisitions and lastly succession planning.
A dozen top-tier dealer groups are going through an accreditation process, after which their advisers can borrow 3.5 times the recurring income of their business.
CBA plans to expand the division early in the next financial year, although it will remain a niche business.
Creighton also oversees a market specialist franchise banking division. It deals with 35 franchised systems, including fast food restaurants KFC and Pizza Hut. It is the specialist banker for half of McDonald’s franchisees.
CBA plans to launch a specialist healthcare banking division later this month.
“Among the major banks there’s an increasing need to do something different from their competitors, differentiating ourselves is a key driver for our business and how we go about implementing change,” Creighton said.
“We’re always looking for an edge and to something different. And the market specialist offering is a significant edge. If we can deliver greater service to the existing clients the market share growth will come.”
