Key takeaways
Funds under advice is not revenue
Value rests on sustainable advice fees, lawful insurance renewal commissions and other recurring income after associated service costs—not on the balances the practice advises on.
Ongoing fees depend on continuing consent
Ongoing fee arrangements must be periodically renewed and consented to, so revenue with consent or renewal gaps is less reliable than properly current arrangements.
Licensee agreements can limit a sale
Authorised representative terms may control client records, rights of first refusal and restraints, which can materially affect value to an outside buyer.
Client retention is uncertain on a change of owner
Clients choose their adviser; demographics, concentration and handover arrangements shape how much revenue is likely to remain after completion.
Remediation exposure and levies affect earnings
Unresolved fee or advice issues affect value. Include regulatory costs actually borne by the practice, including CSLR costs passed through by its licensee, without counting them twice.
Value the advice business, not the funds under advice
A financial planning practice may earn ongoing advice fees, lawful insurance renewal commissions and other recurring income. Advice fees depend on services that clients choose to keep paying for; insurance renewal income depends on the applicable policy, commission entitlement and regulatory framework. Funds under advice is a useful indicator of scale, but it is not revenue and it is not owned by the practice. The valuation question is what earnings the practice can sustain, after the real cost of delivering advice that meets legal obligations, under the ownership and licensing structure that will apply after the transaction.
Define the subject first: shares in a corporate authorised representative, a client register and associated goodwill, or an equity interest in a larger advice group. Identify the valuation date, purpose and intended users. A partner exit, a sale to another practice, a licensee buy-back arrangement and a family law property settlement may require different bases of value and different treatment of the same practice.
Licensing structure determines what can transfer
Australian personal advice is provided under an Australian financial services licence, either held by the practice or through authorisation by a licensee. The ASIC financial advice guidance sets out the framework. Many practices operate as authorised representatives, so licensee agreements can govern who owns client records, whether the licensee has rights of first refusal, how fees flow and what happens when an adviser leaves.
Read those agreements before assuming the client register can be sold freely. A buyer-of-last-resort clause, a licensee fee split or a restraint on soliciting clients may materially limit value to an outside purchaser. Equally, an adviser who moves licensee may need fresh authorisations and client communications. The Financial Advisers Register applies to relevant providers, not every type of authorised representative. Eligible relevant providers must hold the required qualifications and be registered to provide the relevant personal advice; appearing as current on the register alone is not sufficient. Verify the adviser’s regulatory eligibility and authorisations for the services that generate the practice’s income.
Ongoing fees require continuing client consent
Ongoing advice fee arrangements are an important component of many financial planning practice valuations, alongside lawful insurance commissions and other income streams. The ongoing fee consent framework was amended from 10 January 2025 under the Delivering Better Financial Outcomes reforms. The reforms removed the annual Fee Disclosure Statement requirement and consolidated ongoing-fee consent requirements, subject to transitional provisions for existing arrangements. Written client consent remains central to the lawful receipt of ongoing fees and deductions from client accounts. Check the framework applying at the valuation date and the evidence of current compliance rather than relying on previous disclosure or renewal procedures.
The practical point for value is simple: a recurring fee is only as durable as the client’s continuing agreement. Analyse revenue by client, service tier and fee type. Identify how many arrangements are current and properly consented, how many are due for renewal and how many clients have opted out in recent years. Revenue from arrangements with consent or renewal gaps should not be treated as equally reliable.
Grandfathered remuneration and insurance commissions
Grandfathering exemptions for conflicted remuneration associated with financial product advice ended on 1 January 2021. Previously grandfathered investment and superannuation commissions cannot be retained as ongoing adviser remuneration merely because an older contractual arrangement continues. Where qualifying payments remain contractually payable, statutory rebate requirements may apply. These amounts should not be treated as sustainable earnings of the advice practice.
Life-insurance commissions are subject to a different regulatory framework. Under the Life Insurance Framework transitional provisions, eligible life-risk insurance policies issued before 1 January 2018, or applied for before that date and issued within the prescribed three-month period, may retain legacy commission treatment. These commissions may represent ongoing income and should not automatically be excluded from maintainable earnings. Eligibility, subsequent policy changes, commission entitlement and transferability must be verified.
For policies subject to the newer remuneration arrangements, applicable commission limits, clawback provisions and client-consent requirements must be considered. The informed-consent requirements introduced on 9 July 2025 include transitional exceptions for existing insurance policies and certain business transfers. Eligibility depends on the statutory conditions, not simply the age of the practice or a description of the income as “grandfathered”.
A valuation should distinguish ongoing advice fees, eligible insurance renewal commissions and other lawful recurring income. Each stream should be assessed for its legal entitlement, historical persistence, transferability, expected duration, compliance risks and associated servicing costs.
Signed
A clear valuation conclusion starts with an agreed purpose, relevant evidence and disclosed assumptions. The report identifies the interest valued and explains the reasoning behind its conclusion.
Client demographics, retention and service cost
Transfer of ongoing fee arrangements
A sale of an advice business does not necessarily terminate existing ongoing fee arrangements or require every client to provide fresh consent. ASIC guidance recognises that existing consents may remain valid following a transfer of rights, subject to the arrangements remaining otherwise unchanged. However, contractual rights, licensee requirements, client notification, continuing consent and the client’s right to terminate must be considered. ASIC expects clients to be notified and reminded that they can terminate their arrangements. The valuation should distinguish legally transferable revenue arrangements from assumptions about future client retention.
For insurance commissions, ASIC guidance also recognises a business-transfer exemption from obtaining fresh informed consent where the seller obtained the required consent and the statutory conditions are satisfied. Verify the original consent and the applicable exemption rather than assuming that all transferred policies qualify.
Client relationships transfer imperfectly. Clients choose their adviser, and a change of ownership may prompt some to leave. Retention depends on the relationship with the outgoing adviser, the quality of the handover, the buyer’s service model and how long the vendor stays to introduce clients.
Examine the client base: age profile, account sizes, revenue concentration among the largest relationships and the proportion of clients drawing down on retirement savings. A practice heavily weighted to older clients in drawdown may face declining fees as balances fall, while a younger client base may support growth. Neither is good or bad in isolation; both affect maintainable revenue.
Service cost matters as much as fee revenue. Delivering annual reviews, statements of advice and compliance work requires adviser and paraplanner time. A practice charging fees to clients who receive little service carries a risk of complaints or remediation rather than an asset. The review should connect each fee tier to the service actually delivered.
Remediation, complaints and levies
Historic fee-for-no-service findings across the industry demonstrated that past advice and fee charging can create substantial liabilities. Ask whether any review, complaint, licensee audit or regulator inquiry has identified issues, and whether advice files support the fees charged. Unresolved exposure may require specific treatment, indemnities or a lower reliance on historical earnings.
Practices also bear regulatory costs, including licensee fees, professional indemnity insurance and applicable ASIC industry funding costs. The Compensation Scheme of Last Resort commenced in April 2024, with relevant financial advice licensees among those required to fund it. The relevant licensee is generally the legal CSLR levy payer, not necessarily an individual authorised representative practice. Examine whether the practice bears a cost directly or through a pass-through in licensee fees, and avoid counting the same cost twice. Maintainable earnings should reflect current and reasonably expected levels of those costs, not historical figures from a lower-cost period.
Adviser dependency and owner remuneration
Many practices depend on a principal adviser who holds most client relationships. Normalise earnings by deducting a supportable commercial cost for the advice work that adviser performs. If the principal earns a share of revenue under a common split model, the valuation should identify what the business would pay a replacement adviser of comparable standing, not simply remove the principal’s drawings.
Where several advisers work in the practice, analyse which relationships sit with which adviser and whether employment terms include enforceable restraints and client non-solicitation provisions. A practice whose revenue is spread across a team with documented processes and a shared client service model is generally more transferable than one built around a single person.
Methods and market evidence
Practices are often discussed in terms of a multiple of recurring revenue. That shorthand can hide differences in margin, client quality, consent status and transaction terms, including retention-based payment structures where part of the price is adjusted if revenue falls after completion. A headline multiple from a deal with retention clawbacks is not comparable with an unconditional price.
Capitalisation of maintainable earnings, after commercial adviser costs and current regulatory expenses, is often appropriate. Relevant transaction-based evidence may also be useful where the client base, margins, lawful revenue streams and transaction terms are sufficiently comparable; no method is automatically preferable in every practice valuation. Where client attrition, fee changes or service restructuring will alter earnings, a discounted cash flow modelling expected retention can help. Our professional services valuation guide and accounting practice guide discuss related client-transfer issues.
Prepare the evidence
Gather three years of financial statements and monthly revenue by client and fee type; a current client register with service tiers, ages and consent dates; licensee and authorised representative agreements; adviser employment terms; complaint and review history; and current levy and insurance costs.
Insurance commission evidence
For a practice with insurance commission income, also prepare:
- Commission income split between advice fees, initial insurance commissions, renewal commissions and other income.
- Insurer-by-insurer commission statements, policy commencement dates and commission schedules.
- Identification of qualifying policies issued before 1 January 2018, or applied for before that date and issued within the prescribed three-month period, with evidence supporting legacy commission eligibility.
- Policy lapse, cancellation and persistency history, including changes in renewal receipts over time.
- Commission ownership and transfer arrangements under licensee and insurer agreements.
- Evidence of compliance with applicable remuneration and consent requirements, including the basis for any claimed exception or transitional treatment.
These records help distinguish revenue with sustainable economic value from income that may expire, lapse or be lost on transfer. Reconcile commission statements to the accounts and identify servicing costs and any actual or contingent clawback exposure separately.
IBV™ values the practice on that evidence; whether a client transfer, licensee change or restraint is permitted is a question for your legal and licensee advisers.
Sources and further reading
Check the law and guidance applying at the valuation date. Regulatory sources explain the framework; they do not establish that particular clients, consents or licensee arrangements will continue after a sale.
ASIC: Giving financial product advice — ASIC’s regulatory guidance on licensing, conduct and ongoing fee arrangements for financial advisers.
Moneysmart: Financial Advisers Register — The public register of relevant providers, their authorisations and qualifications.
Compensation Scheme of Last Resort — Information on the scheme and the levy funded by relevant financial firms.
ASIC RG 246: Conflicted and other banned remuneration — Guidance on conflicted remuneration and applicable life-risk insurance benefits.
Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017 — The Act and transitional provisions for life-insurance remuneration, reproduced from the Federal Register of Legislation.
ASIC INFO 292: Informed consents for insurance commissions — Consent requirements, existing-policy exceptions and business-transfer treatment.
ASIC INFO 286: Ongoing fee arrangements and consents — The amended ongoing-fee framework, transitional arrangements and transfer of fee rights.
Corporations Act 2001: section 1549B — See section 1549B(2) for the life-risk insurance transitional eligibility provisions, including qualifying applications made before 1 January 2018.
Frequently asked questions
Is a financial planning practice worth a multiple of recurring revenue?
Recurring-revenue multiples are a common shorthand, but they hide differences in margin, client quality, consent status and deal terms. A valuation examines maintainable earnings after commercial adviser and regulatory costs.
Do clients transfer automatically when a practice is sold?
No. Clients choose their adviser and may leave after a change of ownership. This retention risk is separate from whether existing contractual fee rights and consents can transfer. Current consent, contractual terms, licensee requirements and a realistic handover should be assessed rather than assuming all revenue remains.
How do licensee agreements affect value?
They may govern ownership of client records, rights of first refusal, buyer-of-last-resort terms, fee splits and restraints. These can limit who can buy the practice and on what terms, so they are read before value is assessed.
Are grandfathered commissions included when valuing a financial planning practice?
It depends on the type of commission. Grandfathering exemptions ended on 1 January 2021, so previously grandfathered investment and superannuation commissions cannot be retained as ongoing adviser remuneration merely because an older contract continues. Statutory client rebate requirements may apply to qualifying payments that remain contractually payable; these amounts are not sustainable practice earnings. Eligible life-risk policies issued before 1 January 2018, or applied for before that date and issued within the prescribed three-month period, may retain legacy commission treatment. Lawfully continuing renewal commissions may contribute to value, subject to statutory eligibility, subsequent policy changes, entitlement, persistence, transferability and associated costs.
Does selling a financial planning practice require all clients to sign new fee agreements?
Not necessarily. Under ASIC guidance, existing ongoing fee consents may remain effective following a transfer of rights where the relevant arrangements remain otherwise unchanged. However, contractual rights, licensee requirements, client notification and the clients’ ability to terminate must be considered. A valuation should not assume that every client or revenue stream will automatically remain with the purchaser.
Why does client age profile matter?
Clients drawing down retirement savings may produce declining fees as balances fall, while younger clients may support growth. The profile affects how revenue is expected to change over time.
How is the principal adviser’s income treated?
The analysis deducts a supportable commercial cost for the advice work performed, often benchmarked against what the practice would pay a comparable replacement adviser, rather than removing the principal’s drawings entirely.
What if there are past fee or advice issues?
Unresolved fee-for-no-service, complaint or advice-quality issues can create liabilities. They may require specific treatment, indemnities or reduced reliance on historical earnings, with legal advice on the exposure.
How do retention-based payment terms affect comparisons?
A price partly adjusted for client attrition after completion is not comparable with an unconditional price. Market evidence should be interpreted with the payment structure in mind.
What information should we prepare?
Financial statements, revenue by client and fee type, a client register with service tiers and consent dates, licensee agreements, adviser employment terms, complaint history and current levy and insurance costs. For insurance income, include insurer commission statements and schedules, policy commencement dates and pre-2018 status, lapse and persistency history, ownership and transfer terms, and remuneration and consent compliance evidence.
Does IBV™ provide financial advice or licensing advice?
No. IBV™ provides valuation analysis. Licensing, client transfer, consent and restraint questions should be addressed by your licensee, legal and compliance advisers.
A clear, independent view of value — with the evidence behind it.
- Understand the conclusion — and what drives value.
- Gain an independent perspective. Move forward with confidence.
- Benchmark your business against industry performance.
- Identify strengths, risks and opportunities through SWOT analysis.
WHAT YOU GET IN A LIMITED SCOPE VALUATION REPORT
Inside your IBV™ report
Executive Summary
Conclusion of value · Method selected · Valuer qualifications
Detailed Report
Maintainable earnings · Cap rate / multiple · Premise of value
The Evidence Pack
SWOT analysis · Top Performers Report · RAVDA score
APES 225 voluntarily aligned. Report depth and supporting analysis follow your agreed package and engagement scope.
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