Planning principals rush to leave industry

The AXA group has warned of massive upheaval in the financial planning sector as almost half of all planning practice owners look to exit the industry within the next five years.

AXA, which owns AXA Financial Planning, Charter Financial Planning, iPac Securities and Monitor Money dealer groups, and has a stake in Tynan Mackenzie, said its own research had confirmed a previous poll of advisers which warned that a wide scale consolidation of planning practices was looming.

The original poll, by independent consultants Business Health, found that with a growing number of financial planning practice owners heading towards retirement age, almost one in two would look to sell out within the next five years.

“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,” AXA distribution planning manager Steven Davison warned in a statement.

“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.”

But the rush to sell out could leave many principals stuck with a less than optimal price for their business, Davison warned, with AXA’s research suggesting many profitable practices are too quick to sell out to institutions in return for an immediate financial fillip.

The only upside could be for cashed-up buyers, who could take advantage of the push to retirement by older advisers to grow their businesses exponentially.

“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,” Davison said.