Evidence-led valuations for financial planning practices and client books.

A financial planning practice valuation determines what an advice business or client book is worth for a sale, partnership change, licensee transition or tax event. Since the Hayne Royal Commission, recurring revenue multiples have repriced downward and larger practices increasingly transact on EBIT. Prismi prepares independent, evidence-led valuations that test both conventions and conclude at the most supportable position, senior-reviewer signed.

When a financial planning practice needs an independent valuation

The obvious trigger is a transaction — a sale to a consolidator, an equity stake for a senior adviser, a partner exit. But a large share of engagements are tax and legal events: small business CGT concession claims on exit under Div 152 ITAA 1997, restructures under Subdiv 328-G, related-party transfers priced at market value under s 116-30, family law property matters and buy-sell agreement triggers. In each case the value that matters is market value on Spencer v Commonwealth willing-but-not-anxious principles — not the licensee's internal buyback formula and not a broker's appraisal calibrated to win a listing. An independent valuation is documented so the position is defensible if the ATO, a court or the other side's expert reviews it, prepared with the ATO's market valuation guidance, IVS 104 and APES 225 in mind. Prismi prepares independent valuations only — we are not a registered tax agent, and your accountant or lawyer handles the tax and legal application of the result.

Common valuation triggers

• ·Practice or client book sale to a consolidator, licensee-aligned buyer or incoming adviser
• ·Equity introduction or partner exit priced off an agreed valuation mechanism
• ·Small business CGT concession claims on exit, including the s 152-40 active asset test
• ·Restructure from sole trader or partnership into a company or trust (Subdiv 328-G rollover)
• ·Licensee transition or move to self-licensing where book value must be evidenced
• ·Buy-sell agreement and key-person insurance funding reviews
• ·Family law property settlements and shareholder or partnership disputes

What your practice is worth: revenue multiples versus EBIT

Before the Hayne Royal Commission, the convention was simple: quality books changed hands at 3.0 times recurring revenue or better, and AMP's buyer-of-last-resort terms contracted at 4.0 times. The market has repriced. Commonly cited transaction benchmarks now cluster around 2.0 to 2.5 times recurring revenue for quality books, with segment evidence spanning roughly 1.9 to 3.5 times depending on client age and average fee. More importantly, the convention itself has shifted: larger practices increasingly transact on a multiple of EBIT, because a revenue multiple ignores cost-to-serve. Two books each producing $800,000 of recurring revenue are not worth the same if one runs at a 40 per cent margin and the other at 12 per cent — pricing both at the same revenue multiple dramatically overstates the low-margin book. Prismi tests both conventions: capitalisation of maintainable earnings is generally the primary method for established practices, with the recurring revenue multiple as a cross-check, and the report explains why the concluded position sits where it does within the supportable range.

Fee consent quality: how durable is the revenue you are selling

Under the post-Hayne reforms, ongoing fee arrangements must be renewed with the client's active written consent, and the Delivering Better Financial Outcomes reforms replaced the annual fee disclosure statement with a streamlined consent for arrangements entered or renewed from 10 January 2025. That machinery turned every recurring revenue line into revenue the client re-approves on a cycle — which makes the renewal rate the core durability metric for the book. A book where consents are current, complete and centrally documented supports a materially stronger position than one where a portion of clients have lapsed, consent records are scattered across platforms, or fees are still being deducted against stale authorities. The working file records the consent audit: renewal rates by client cohort, lapse and fee-turn-off history, and any revenue lines that fail the consent test and must be excluded from maintainable revenue before a multiple is applied to anything.

Client demographics, decumulation and revenue per client

Two books with identical revenue can have very different futures. Where fees are asset-based, a client base concentrated in retirees drawing down pensions carries structural decumulation risk — funds under management fall as clients spend, and revenue follows. Published transaction benchmarks price this explicitly: books weighted to older, decumulation-phase clients attract measurably lower revenue multiples than younger accumulation-phase books. Revenue per client matters just as much. Post-Hayne compliance obligations pushed the cost of serving an advice client up sharply, and a tail of small-fee clients may be worth little or nothing to an acquirer who cannot serve them profitably. The valuation segments the register — by age band, fee level, service tier, and asset-based versus flat-fee — and applies that analysis to both maintainable revenue and the multiple, rather than pricing the book as an undifferentiated whole.

Licensee dependence, grandfathered remnants and the BOLR lesson

Most practices operate under a third-party AFSL, and the licensee relationship is a valuation input in its own right. Licensee fees affect margin; the approved product list shapes the client proposition; and transitioning licensees — or moving to self-licensing — carries real cost in adviser re-authorisation, client re-papering and consent renewal, with some attrition along the way. Where a sale is conditional on the book transferring to the buyer's licence, that transition risk belongs in the valuation, not in a footnote. Diligence also checks for remnants of grandfathered commissions, banned from 1 January 2021 — any legacy line still sitting in the accounts is not maintainable revenue. And the AMP buyer-of-last-resort litigation is the sector's standing caution on contracted multiples: AMP's BOLR policy promised practices a 4.0-times-recurring-revenue buyback, AMP cut the terms in 2019, the Federal Court found the changes ineffective in 2023, and a $100 million settlement followed. The valuation lesson is that a contracted buyback multiple is a contractual promise, not market value — a Spencer-basis valuation asks what a willing but not anxious buyer would actually pay for this book, on these consents, today.

The right engagement tier for a financial planning practice

For a straightforward book valuation supporting an internal transaction or planning decision, the Essential tier from $1,495 + GST (10–14 business days) is usually sufficient. Most practice sales, partner equity transactions and CGT concession claims are best served by the Comprehensive tier from $3,995 + GST (15–25 business days), which documents the consent audit, client segmentation and methodology reasoning in full. Where the valuation is likely to be contested — family law, a dispute with a licensee or co-owner, or ATO review of a significant concession claim — the Defensible Valuation File from $8,995 + GST (25–35 business days) is built for scrutiny, with the complete working file retained for 10 years. Practices weighing a sale against succession alternatives sometimes engage the Valuation Range & Scenario Review to test both paths. Retrospective valuations at historical dates add $495 per date, additional entities are $750 each, and fees are fixed at engagement and never contingent on the outcome. If a client needs the number to land somewhere specific, we will say so and decline the engagement on those terms.