Succession to drive consolidated growth of Australian Financial Advice Practices in the next 5 years

According to a Business Health survey, in the next five years, nearly half of the principals operating these businesses will seek to exit the industry. This situation will provide both a challenge and an opportunity for the Financial Services Industry. The two significant challenges for the principals of these Financial Advice Practices seeking to leave the industry are -Finding a successor to take over the business. -Finding a buyer to purchase the practice. Our own market intelligence confirms the Business Health survey results, with over 5,000 Financial Advice Practices operating in a highly fragmented market that are in the main dependant on the owner/principal. The maturing average age of many of the Financial Advice Practices owner/principals, together with the increasing cost of running a business will be the significant issues driving consolidation, said AXA Distribution Planning Manager, Mr. Steven Davison. Often, many Financial Advice Practices and principals struggle to identify an appropriate successor that can afford and has the desire to take on their practice. Mr. Davison continued, For potential buyers of a Financial Advice Practice, they are faced with two crucial decisions -Where to obtain professional advice, and -Securing funding to purchase the Practice. Although faced with these issues, the opportunities for prospective buyers will be considerable and attractive. For buyers, the situation provides an entrepreneurial opportunity that includes the ability to expand revenue and distribution through acquisition; larger profit margins through scale and building long term perpetuity into the business, said Mr. Davison. Our research also revealed that funding is often difficult to obtain and as a result, many profitable Practices give away equity prematurely, often to an institution, in return for financial support today. To address this situation, AXA Financial Advice Network will release a business growth solution to assist Financial Advice Practice Principals to realise the potential and value of their businesses either through succession, sale or purchase. The AXA solution to be released in November will provide an integrated suite of services that includes -Consulting -Due Diligence - Funding -Integration assistance -Business management. We believe that the AXA business growth solution provides a win-win scenario for buyers, sellers and the industry thus ensuring that Australian consumers are serviced by long term; well established; professionally positioned and operated Financial Advice Practices, concluded Mr. Davison.