tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, November 1st, 10:39AM

Insurance

rss
Latest Headlines

Recent M&A activity, what is driving it and what it means

FSLAA on the one hand and low interest rates on the other is driving a K-shaped market for client bases. FSLAA implementation will push down values for client bases at the bottom end of the market while leaving the market for medium and large sized client bases firmly in the grip of wider market fundamentals.

Friday, March 11th 2022, 11:21AM

First FSLAA impacts – we believe current estimates overstate the number of advisers in the new regime. Estimates of the number of FAs in the new regime are based on application data by FAPs.

As each transitional license application was made the FAP was required to estimate the number of FAs it intends to employ. It has to be said, fairly enough that this is the best formal estimate we have.

I would use the sum of these estimates as well, for a first attempt at the expected number of advisers in the new regime.

However, compliance advisers report that when faced with the question, if a FAP was unsure of the number, they were advised to enter a higher figure. For example – if you previously had a dozen RFAs contracted to the business, and you were unsure if you would bring all of them across you probably still put that number down as 12. In practice we think the requirement to have all FAs connected to FAPs by July 15 will probably see lower numbers reported as more leave.

What impact will that have on the market?

It will be modest.

Consider, for example, even if we terminate the least productive 1,000 advisers. The typical client base within the group comprised less than $5,000 a year in renewal income.

If the total renewal revenue was $5 million, at even a high multiple (say 4.5x) the value is $22.5m – but these books will not attract that multiple – they will more than likely transact at about 2x. A total of only about $10 million.

That could easily be absorbed by just one or two of the businesses that we know acquire books regularly.

On the other hand, consider the hunt for yield and the need to find a safe harbour for investment money

There are investment dollars looking for a home. Interest rates must rise a long way before they challenge the value of investing in a well-run financial services business.

Tags: Russell Hutchinson

« Can you do digital insurance advice with a tiny IT budget?Govt's proposed income insurance scheme may hurt insurers »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

nib launches tool to support women through menopause
nib has launched a new health management programme designed to support women as they navigate the stages of perimenopause and menopause.

Employees are wanting health and life insurance
A new survey shows potential employees what life and health insurance benefits, but less than a third of employers plan to offer such benefits.

Chubb Life makes changes to trauma benefit
Chubb Life has made a series of enhancements to its Assurance Extra and Assurance Extra Business policies, including the addition of a new Continuous Trauma Benefit,

Resolution Life gets new president
Global life insurance group Resolution Life has appointed Moses Ojeisekhoba as its new President.

News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com