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Jessica Darnbrough
Having multiple revenue streams will help brokers earn higher multiples on their business, claims a leading brokerage.
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Speaking to The Adviser, Bernie Lewis’ Stefan Lipkiewicz said brokers who integrate other services into their businesses can expect to sell their asset for a larger amount when they eventually leave the industry.
“Mono-line businesses are worth approximately 1.5 to 2 times recurring trail when being sold,” Mr Lipkiewicz said.
“By comparison, brokers with diversified businesses that include other wealth and risk services can expect to sell their businesses for 3.5 times their recurring trail.
“It makes good business sense to diversify, not just now but in the future as well.”
According to Mr Lipkiewicz, 'integrated clients' are approximately three to four times more valuable to a broker than mono-line clients who only have their mortgage through their broker.
“Brokers who diversify not only add to their bottom line now, but they can also expect to sell their businesses for significantly more down the track. Of course, that diversification must happen in-house for the business to be worth more.”
Mr Lipkiewicz’s comments come just days after a new poll revealed that slightly more than half of mortgage brokers are not looking to add another revenue stream to their business this year.
Of 158 respondents to an online poll conducted by The Adviser, 50.6 per cent will not add another business stream in 2013, while 48.1 per cent said they would add to their business.
