Jason Phillips, the director of business broker JNP Capital, said the line between financial planners and accountants is becoming blurred.
The next two to three years will see the rise of multi-partner firms that advise small- to medium-sized businesses and professionals, he said.
The “big ticket” items currently on the regulatory agenda – the requirement for planners to become registered tax agents under the Tax Agents Services Act, the limited financial services licence for accountants, and the APES 230 ethical standards for accountants when it comes to remuneration – are merely creating a framework for a trend that is already underway, said Mr Phillips.
JNP Capital is seeing the demand for accounting practices remain “very strong”, with valuations sitting at about one times recurring revenue, said Mr Phillips.
Traditionally, accounting practices have been valued at between 80 and 100 cents in the dollar, but valuations have been steadily creeping upwards as demand increases, he said.
Conversely, the value of financial planning practices is on mild decline from the 2.5 times recurring revenue mark, said Mr Phillips.
When it comes to remuneration models, Mr Phillips said he is seeing financial planning practices move towards a fixed fee or hourly rate – similar to the model used by accountants.
This suggests the controversy in the industry about the APES 230 ethical standards relating to remuneration may be a “storm in a teacup”, with many financial planning/accounting firms satisfying its requirements already.
Ultimately, Mr Phillips predicted firms with three to four practitioners will soon be hard to label as ‘financial planning’ or ‘accounting’.
It will only be ‘one-man shows’ that will be easy to pin down, given that it is difficult for one person to “do everything”, he said.
