The accounting profession has been heeding warnings for several years now that traditional sources of revenue, including compliance-based services, will not provide a steady or substantial revenue stream in the long term.
The phase-out of the accountants’ exemption, which forces accountants to consider becoming licensed under an AFSL to provide SMSF advice, has been touted as an opportunity for accountants to add value to their clients through the provision of additional advice-based services.
However, Vivienne Quinn, of recruitment and practice broking specialists Quinn & Associates, has identified a distinct lack of demand for accounting practices that contain a wealth management arm as part of their revenue base.
“We’re finding that there’s not a great demand in the market from purchasers to buy wealth management fees,” Ms Quinn told SMSF Adviser’s sister publication AccountantsDaily.
“I believe it’s because purchasers are nervous about the changes that are happening around wealth management legislation and rules. I’m hoping it’s just a passing trend.”
According to Ms Quinn, even practices that are located within “very saleable” cities are proving unpalatable to potential buyers if they contain any presence of wealth management.
Ms Quinn gave the example of a reputable Sydney firm with a revenue base consisting of $700,000 in accounting fees and $200,000 in financial planning, which has been on the market since June 2015.
“It’s the financial planning side that’s held it back,” said Ms Quinn.
“If it had been a straight accounting firm, we would have had it under contract within six weeks – no problems at all.”
Despite flagging a concerning trend, Ms Quinn was quick to point out that there was no succession planning issue within the accounting industry, as the demand for practices remains as high as ever.
“In all the years that we’ve been selling practices, there has always been a shortage of vendors and an oversupply of purchasers; the only time a one or two-partner firm would have difficulty selling or would take a lengthy time to sell is if it is located in a small regional town.”
She added: “There is high demand across every capital city in Australia, and high demand across every sizeable regional city.”
“It’s definitely a seller’s market," Ms Quinn concluded.