IFA Prices

The prices paid to IFA sellers are still good; with selling IFAs actually getting generally 3 times trail fees, with about a third being paid in advance. The higher the offer, the less is paid in advance. The smaller the advance payment, the greater paid overall. One should look at the overall offer, including for how long the IFA buyer wishes to retain the services of the IFA seller and remuneration package. Will there be an “earn out” period, or is the agreed price unconditional? No Buying IFA will pay significant sums for a list of names. The greatest value to a business is the transfer of the “goodwill” between seller and buyer, so a hand over period is always sensible for an IFA buyer, giving time for relationship to be transferred. The closer December 2012 looms, the harder it will be for purchasers to establish relationships with clients, and the prices attained for all IFA businesses is likely to significantly fall. After 2012 providers may refuse to pay trail fee to businesses that have not fulfilled the regulatory hurdles.

More info can be found on http://www.ifaclientsale.com

Sell IFA

It is generally thought the impact of RDR will cause the IFA population to shrink from circa 35,000 to 10,000 by December 2012. We understand the CII exams have a 45% pass rate even after upwards of 60 hours of self-study. With an average age of 57, many retiring IFAs are looking to exit the industry imminently. Besides this, the vast majority of IFAs will find the transition to a pure fee world difficult. Selling IFAs would be prudent to start planning earlier rather than later.

Buy IFA

It is generally accepted that the fastest mechanism to expand a business is to buy someone else’s. Seminars, and direct mail all have their place; however they are time consuming and in times of volatility can be rather risky. In our experience over the last three years, all IFA buyers have either recouped, or are on track to recoup their initial capital and make significant profit. Post sale, the IFA buyers have significant trail fees and client relationships from which they otherwise would not have benefited. This is a time of significant opportunity for qualified IFA businesses wishing to expand in the post RDR world.