Advice practice valuations that test each ongoing fee against its consent, its cost to serve and the client.

A financial advice practice valuation is an independent opinion of what an advice business or client book is worth on a set date. Value rests on ongoing fee income that clients must consent to renew each year, the cost of serving those clients, client age and stage, adviser and licensee dependence, and how cleanly the records transfer. Agency Valuations values the business; we do not give financial product advice. Fees are fixed: $1,495 + GST where the annual recurring income of the book, or the practice's turnover, is under $2 million, delivered in 2 business days.

When does a financial advice practice need a valuation?

• ·Selling the practice, or a client book, to another practice, licensee or acquirer
• ·Buying a client book from a retiring adviser
• ·An adviser buying in, or a partner leaving
• ·Succession for a principal stepping back
• ·Moving to a new licensee or your own licence, where book value must be evidenced
• ·Moving the practice into a company or family trust, where tax law needs a market value for related-party transfers
• ·A shareholder dispute, or a buy-sell agreement that needs an agreed value

Why do ongoing fee consents sit at the centre of the value?

Most advice practices are valued on ongoing fee income, and the law makes that income conditional. An ongoing fee arrangement exists where a client receives personal advice as a retail client and agrees to pay a fee over more than 12 months (Corporations Act s 962A). It terminates if the client has not given a written consent that meets the legal requirements, or if a consent lapses without a new one in the window from 60 days before to 150 days after the reference day (ss 962F and 962H). The client can also end it at any time (s 962J). The reforms that started on 10 January 2025 removed the fee disclosure statement, for new arrangements from that date and for existing ones from their next anniversary, so the yearly consent carries the weight.

ASIC's guidance (INFO 286) expects consent, renewal and termination records to be kept for at least 5 years. It also says transferring an arrangement to a new fee recipient does not by itself make a client's consent invalid where the arrangement otherwise stays the same, and that clients should be told of the change.

For a valuation, each client re-approves the revenue every year. The valuation reviews consent status by client and by income, and excludes fees not supported by a current consent.

What drives the value of an advice practice?

Two practices with the same ongoing fee income can be worth very different amounts. A buyer, and the valuation, will test these drivers.

• ·Consent renewal rate, by client count and by income, and how many arrangements are near or past their renewal window
• ·Fee per client, and the tail of small clients who cost more to serve than they pay
• ·Client age and stage: where fees are linked to assets, clients drawing down in retirement shrink the fee base
• ·Fee structure: fixed fees are steadier than asset-based fees, which move with markets
• ·Cost to serve: reviews, advice documents, paraplanning and compliance time per client
• ·Adviser dependence: whether clients are loyal to one adviser who is leaving
• ·Licensee costs, and the cost of moving clients to a buyer's licensee
• ·File quality, complaints and any remediation exposure

How do licensee arrangements affect what a buyer will pay?

Advisers provide financial services under an Australian financial services licence, either their practice's own or as authorised representatives of a licensee (Corporations Act ss 911A and 916A). Where a sale depends on clients moving to the buyer's licensee, the cost and risk of that move belong in the valuation: re-authorising advisers, notifying clients, new paperwork and some client losses.

The licensee agreement can also set client ownership, a first right of refusal, restraints and a buy-back price. A contracted buy-back price is a contract term, not market value, and the report explains any difference.

Two other rules matter in diligence. Payments that relied on the old grandfathering of conflicted remuneration cannot continue from 1 January 2021, with a rebate scheme to clients instead (ss 963M and 963N), so any legacy line is not maintainable income. And since 9 July 2025, insurer remuneration on certain life risk insurance, where personal advice is given to a retail client, needs the client's informed consent (s 963BB). Where an advice business is wholly or partly sold or transferred to another licensee or representative, s 963BB(4) treats an existing consent as also covering the new recipient. A buyer should have a lawyer confirm how the rule applies to the sale.

Should an advice practice be valued on revenue or earnings?

Both, tested against each other. A recurring revenue multiple ignores cost to serve: two books with the same ongoing fee income are not worth the same if one runs at a healthy margin and the other barely covers its advisers and compliance. For an established practice, capitalised maintainable earnings, with the principal's pay adjusted to market, is often the primary method, with the revenue multiple as a cross-check.

For a book bought by an existing practice, the question is what the consented fee income will add after the extra cost of serving those clients. For the fee, a book on its own is banded by its annual recurring income, and a whole practice, or shares in it, by its total annual turnover.

Why does a rule-of-thumb multiple mislead for advice books?

Advice books are often discussed as a multiple of recurring revenue, and older conventions linger from before the consent and fee reforms. A multiple says nothing about whether fees are consented, how old the clients are, what each costs to serve, or whether a licensee buy-back price is being treated as market evidence. The valuation starts from those facts and shows the implied multiple as an outcome.

What does an advice practice valuation cost?

Fees are fixed in writing before work starts and never depend on the value concluded. Delivery time starts once payment and all required information have been received. Every report is signed by a suitably qualified business valuer and follows the guidelines of APES 225 Valuation Services.

• ·Small Business Valuation: $1,495 + GST where annual revenue is under $2 million, 2 business days
• ·Medium Business Valuation: $2,495 + GST for $2 million to $3 million, 3 business days
• ·Large Business Valuation: $3,495 + GST for $3 million to $10 million, 3 business days
• ·Above $10 million: quoted in writing before work starts, delivery date agreed before commencement
• ·Expert report for a dispute or court: $4,495 + GST, delivery date agreed before commencement
• ·Add-ons: +$495 per retrospective (past) valuation date and +$795 per additional entity