The Australian Financial Planning industry is facing a regulatory shift which will seriously impact the way this sector delivers its services and makes its money. The planned reform concerns the fee structure and will force industry players to move away from a commission structure to a fee for service model.
The Future of Financial Advice (FOFA) reforms will be implemented via new legislation commencing in the new financial year (2012/2013) if the federal opposition allows it to go through (the federal opposition has 16 broad recommendations to modify the reform).
The planned regulatory shift from commissions to a fee for service model will apply to all new financial planning customers and will force Australia’s financial planners to implement new systems, processes and platforms to ensure their products and services are compliant.
FOFA regulatory change leads to increased M&A activity
Corality is seeing the impact of the FOFA regulatory change to the financial planning industry through an increase in prospective M&A activity in the sector. Larger financial planning groups are looking at acquiring smaller firms whose owners have accelerated their exit plans in the face of significant changes to their industry.
Larger firms with compliant platforms have the opportunity to substantially increase market share through M&A as the Financial Planning industry consolidates. Corality works with several large financial planning groups who are in the process of analysing significant pipelines of ‘tuck-in’ acquisition targets.
As a buy-side M&A advisor, Corality has been assisting its clients during the M&A analysis process through the development of robust and standardised financial models. The models incorporate, for example, historical normalisations, 5 year forecasts, synergies, discounted cash-flow valuations (pre and post synergies) and high level deal structuring in order to get through the volume of analysis with a consistent and procedural approach.
Corality’s M&A experience and corporate valuation modelling combined with our best practice financial modelling approach (thanks to our financial modelling methodology SMART) offers our clients robust and powerful analysis tools that are flexible, transparent and easy to use. We assist our clients through the initial analysis of acquisition targets and progress negotiations with vendors at speed and with confidence.