Financial planning business owners delay exit plans

Monday, 13 October 2008

A combined MLC/NAB survey announced today that, contrary to popular belief, only 30% of current financial planning business owners intend to exit their businesses within the next five years.

The survey, conducted in September by researchers Business Health, questioned 230 businesses on behalf of NAB Business Bank's Financial Planner Banking team and the MLC Adviser Business Centre.

Bob Neill, National Manager, MLC Adviser Business Centre said, "These findings contradict much of the market commentary we have been hearing for the last few years. The survey indicates that financial planning business owners are continuing to push back their exit plans, rather than trying to get out early."

Malcolm Arnold, National Manager of NAB Financial Planner Banking, said "Financial planning business owners realise the strength of the sector in which they operate. It offers multiple development opportunities and there is great potential to build long-term assets."

Mr Neill added, "We have been encouraging businesses for some time to take a longer term approach to their exit. We were surprised to learn though that only 10% of businesses surveyed have a fully documented succession plan in place. This is despite media saturation and close commentator attention on this issue in recent years.

"Businesses either don't consider it important to have a succession plan or more likely, they are unsure how to develop one and put it into action."

Surprisingly almost 80% of respondents to the survey also said their exit timeframes have not changed in the last 12 months despite the recent market volatility. These findings highlight some disparity between the plans of current business principals and the aspirations of many younger advisers.

According to Mr Arnold, "The failure of business owners to effectively plan their succession creates some significant challenges for the industry. It's likely that many potential successors will be forced out of equity participation due to their inability to raise the required finance."

Mr Neill commented, "NAB and MLC see many young advisers wanting to buy equity in existing businesses, but the survey reveals that current business owners aren't looking to sell anytime soon.

"However, regardless of the timeframe, businesses should still be working on their succession plan. If you give yourself the advantage of time when preparing for exit you become a 'deal maker', but as time reduces you become a 'deal taker'."

Mr Arnold said, "Banks are increasingly being approached by young advisers seeking large amounts of finance over very short time frames. To increase their chances of successfully raising finance we are urging younger advisers with aspirations of owning equity within a practice and becoming principals, to ensure the current owners are aware of their ambitions. Also, business owners should be encouraging a staged succession over a number of years to support young advisers into the business."

About the survey

The survey was conducted between August and September 2008. 230 financial planning businesses responded providing meaningful data to refer to. Survey respondents received no incentives to participate and business owners were invited online, not telephoned or mailed directly. The survey was commissioned by both the MLC Adviser Business Centre and NAB Financial Planner Banking to determine the views of current business owners.

About NAB Financial Planner Banking

NAB Financial Planner Banking is a dedicated nationwide team within NAB's Business Bank that provides specialised banking solutions to over 700 financial planning businesses across a wide range of licensee arrangements. For further information visit

About MLC Adviser Business Centre

MLC's Adviser Business Centre is a specialist consulting team that provides relevant expert advice and innovative solutions to financial advice businesses both within and external to the MLC licensee network. The key areas of focus include: financial analysis, succession & transaction support, strategic and HR consulting.

For further information:

Kristen Allen
Corporate Affairs Manager
M: +61 (0) 412 759 753

* The information contained in this media release is for media advice purposes only. The contents are true and correct at time of publishing/issuing, however may change over time. For further information about NAB products or rates, please go to Interest Rates, Fees & Charges