The high number of SMSF firms looking to acquire additional businesses, coupled with the severe shortage of firms for sale, means SMSF practices will need to focus on organic growth instead, according to one consultant.
Mayflower Consulting director Sarah Penn said the majority of SMSF firms are looking to grow, whether that means doubling the number of SMSFs they service or increasing the number of advice clients the firm has.
“A lot of SMSF firms plan to do this by acquiring another business – an accounting firm or an advice firm,” Ms Penn told SMSF Adviser.
“The problem is, though, that everyone wants to do that and nobody wants to sell them.”
Ms Penn said many financial advice firms have the plan of purchasing an accounting business and selling the clients of that firm financial advice, with the intention of increasing the value of the firm above what they have paid for it.
“That means you have to find an accounting business that someone actually wants to sell, and there’s a shortage – there’s not that many people wanting to sell them,” she said.
It is often the case with the accounting firms, she added, that the senior partners simply sell their share of the firm to the junior partners.
“So if people really want to grow their businesses, they’ve either got to be prepared to pay good money because there’s going to be competition for it, or they’re going to have put in the hard yards on the marketing side,” she said.
Making a long-term investment in the marketing of a firm means working on it every week to ensure that the money spent upgrading websites and investments for other marketing tools has not gone to waste, she said.
“I have always described successful marketing is a bit like going to the gym and getting fit. You can’t go to the gym for three weeks, and wonder why you’re not looking great,” said Ms Penn.
“Marketing is the same, you can’t just run a few blog posts and put a few things on twitter, and wonder where all the clients are.”
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