New buyers entering market: Prendeville
The last six months have seen the emergence of a new crop of buyers with in-house products, according to financial planning practice broker Stephen Prendeville.
Prendeville, who is the director of Forte Asset Solutions, said the new buyers have remodelled their businesses with in-house products and are looking to transition existing funds under management into their platforms.
"A lot of the mid-tier dealer groups will need to do that as their revenue is threatened by the conflicted revenue provisions after 1 July 2013. More and more groups are starting to have their own funds management capacity," said Prendeville.
The dealer group Fitzpatricks is a good example of a business with in-house products, said Prendeville.
"If Fitzpatricks make an acquisition, they want people to use their intellectual property. That can have two impacts: it reduces the cost to the business ... and it decreases the cost for clients," he said.
Private equity firms are also making an appearance in the planning practice market, said Prendeville.
Much of the private equity activity is "opportunistic", because these firms believe "the worst is over" when it comes to the economy, he said.
"They can see the suppressed prices and suppressed revenue and have the desire to get into what is almost the 'ground floor' of financial services," said Prendeville.
Family offices are also deciding to extend their service offering down to high-net-wealth clients with between $1 million and $10 million in assets, he added.
Prendeville also expects to see a resurgence in listed entities looking to acquire practices.
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