Demand for client risk books surges
By Julie May
Wednesday 13 May 2009
The number of practice principals and institutions looking to buy risk books in 2009 has increased by approximately 50 per cent since 2007, according to Chris Wrightson, director of broker firm Centurion Market Makers.
"There are approximately ten buyers for every risk book on the market, whereas two years ago the number of buyers was about half that," he told InvestorDaily.
"We're finding that practices and institutions already in the risk market are generally looking to expand through the purchase of another client book, whereas those moving into risk territory for the first time are typically looking to acquire risk books as well as experienced risk writers."
In the majority of cases, revenues of investment-based practices have been more severely affected by the market downturn, whereas risk has generally provided a more stable income stream for advisers in the current environment, Wrightson said.
"Since the global economic crisis began groups are seeing greater opportunity in diversifying their offering, particularly in the area of risk," he said.
"I don't see the interest by practices and institutions in risk opportunities slowing down over the next two years, but it is interesting to note that despite the increased take up of risk books, buyers' interest in investment books has been reasonably constant."
Buyers are being more cautious amid the downturn and compared to 12 months ago are focusing more on cultural fit as well as business model alignment when it comes to acquisitions, Wrightson said.
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