Looks like Pie - the large seller has finally exited completely so hopefully less share price pressure.

Listed advice companies masking indifferent financial performance - Financial Newswire

"With HUB a significant holder of Diverger, CBA a significant holder of CountPlus, and Clearview and Thorney key players at CentrePoint it is only a matter of time before something happens to one of these players to unlock shareholder value."

"It is still difficult to see a pathway to profitability for Insignia and AMP in their own advice businesses."

For those want to get into the weeds of advice - Michelle Levy's report - Quality of Advice Review - Final Report | Treasury.gov.au

A lot of talk in the industry about consolidating the number of forms that need to be sent to clients each year to one.

Also a split advice model - Levy advice review: Labor to ‘stress-test’ plan to overhaul financial advice (afr.com)

There's even talk of video SoA presentations (Statement of Advice) that would cut out a major cost - paraplanners and 100+ page SoA documents.

Any cost cuts should help advisers near term before new adviser's flood back into the industry (I doubt fees will be cut very fast).

"This is a problem because it is estimated about 29 per cent of unadvised Australians are eager to receive professional advice, but 64 per cent of them are unwilling or unable to pay more than $500 a year – falling well short of the going rates, according to Adviser Ratings." - Allens lawyer Michelle Levy reviewed financial advice and found the system broken (afr.com)

Looks like it has been Pie who have been selling. I assume the notice has been lodged incorrectly as further down it says purchases.

2 acquisitions in a month.

Latest is Priority Netwoking (PNET) at 6x EBITA - seem like a good price on the surface without detail on margins/growth etc. "PNET has operated for over ten years, providing technology support services (including cyber protection), to around 130 businesses."

Interesting customer base not being soley focused on the Financial Planning/Accounting industry (not sure what the customer split up is). Looks to have employees in Perth, Melbourne, Sydney and the Phillapines.

I'm also not sure what synergies they can pull out of this - obviously cross selling opporunities in future but not sure what else. bit worried this will turn into a conglomerate of disparate businesses.Cybersecuity is front of mind for all businesses so get the future demand, but this is not entirely focused on accounting/financial planning customers.

For those interested DVR has made another small acquisition of Priority Networking Pty Ltd who have been providing technology and cyber security services for ~10 years to around 130 different businesses.

DVR are opening an 'investor open house' today for those interested. DVR did flag last week a slightly lower NPAT on pcp despite higher revenue due to some extra costs and headwinds to asset markets which impacted the CARE portfolios.

Also doing some interviews with magazines - Diverger sharpens focus on advisers - ifa

Per the AFR - the industry still shedding advisers:

The latest ASIC adviser data comes amid round of mass exits from the industry this week, ahead of the so-called “October cliff” – the deadline by which all advisers must complete a mandatory national exam.

“Losses were very high and we believe the vast majority are due to the non passing of the financial adviser exam,” Mr Williams said. “Licensees have 30 days to report adviser movement and advisers who needed to pass the exam had to do so by September 30.”

AMP lost six professionals this week, taking it below the 1000-adviser level. ASX-listed wealth managers WT Financial (owner of financial advice network Synchron) and Diverger Limited (owner of GPS Wealth and Paragem) lost a 23 and 14 advisers last week respectively, on a net basis.

Relevant to Sequoia as well.

Diverger CEO in the AFR commenting - the Financial Advice industry to me seems reminiscent of the trade school closures in the 1980s and why tradies today are paid so much in Australia compared to other countries.

I'm sure there is bias but then again not sure it would be smart to talk up the struggles given the current review.

In any case I think the future looks bright for financial advice firms with fees unliekly to decline after going up especially as the industry professioanlises - qualificaitons, a professional year for new entrants etc.

Quotes from the artcile below:

"ASX-listed Diverger says wealth management is on a growth trajectory, even as the government considers a radical overhaul of laws said to have made financial advice unaffordable to receive and unprofitable to provide."

"Nathan Jacobsen, chief executive of Diverger Limited... said he was supportive of Treasury’s Quality of Advice Review, which may recommend deregulating financial advice to boost consumer access."

Review "investigate the causes of a 40 per cent surge in financial advice fees to a median of $3500 a year"

"Mr Jacobsen said the commercial outlook for the financial advice sector was more favourable than some proponents of deregulation would be willing to admit."

“Whilst Middle Australia may not be getting financial advice any more, the demand among those willing to pay for financial advice far exceeds the supply of advisers”

“Obviously, simplifications of the regulatory environment would make things easier and better for advisers and consumers alike. But the advice businesses we work with are highly profitable and growing.”

"various financial services licences grew by an average of 15 per cent over the year to June 30. Average revenue per adviser jumped 64 per cent, while net revenue in the licensing business increased 57 per cent over the same period."

"By contrast, ASX-listed competitors Insignia Financial and AMP – Australia’s two largest providers of financial advice – have reported multi-year losses in their licensing operations, each targeting “break-even” milestones in 2024."

"The Quality of Advice Review is accepting stakeholder feedback until September 23. It is expected to hand down a final report by December 16."

Integration Risk. Paragem may not convert seamlessly to profitability.

Capital Allocation and new MD. New managing director Nathan Jacobsen came with the Paragem acquisition from HUB. Will watch his performance closely. Significant risk that a poor acquisition or two could torch capital.

Limited liquidity. Suits long term holders only

A mish-mash of wealth and accounting services businesses.

Wealth Solutions provides dealer services and managed accounts to financial advisors.

Accounting Solutions provides services to accounting firms, primarily training and technical support.

Currently trading at an undemanding multiple of ~10x.

Three sources of near-term growth should result in ~50% uplift in earnings over the next two years:

1/ Paragem Integration

Paragem (including $1m in cash) was acquired from HUB at the beginning of 2021 for $4m in scrip. Paragem adds scale to the Wealth Solutions business. Increasing full representatives and Wealth Solutions revenue by ~50% (171 to 250 representatives, ~$60m to $90m revenue).

Successful integration of Paragem at current rates of profitability could add $0.8m to earnings.

2/ Remaining TaxBanter Acquisition

Easton has the option to increase its interest in TaxBanter from 60% to 100% in January 2022. At current rates of profitability this adds ~$0.5m to earnings.

3/ Organic Growth of Knowledge Shop

Knowledge Shop has been growing at 10% to 20% per year and should continue to do so as demand for online services increase and its expanded offering to financial advisors gains traction.

Two years of continued growth will add ~$0.4m of earnings.