On this page
- KiwiSaver book valuation example
- Why can KiwiSaver books attract higher multiples?
- What actually determines the value of a KiwiSaver book?
- Why does a 4× multiple make economic sense to a buyer?
- Does a growing KiwiSaver book deserve a higher multiple?
- What can reduce the value of a KiwiSaver book?
- How can you increase the value of your KiwiSaver book?
- Do you have to sell the whole book?
- Headline value versus transaction structure
- Frequently asked questions
KiwiSaver client books can be some of the most sought-after recurring-revenue assets within the New Zealand financial advice market.
As an indicative starting point, an established KiwiSaver client book may be valued at approximately:
4.0×–5.0× annual recurring revenue
Indicative only. Actual market value can fall above or below these ranges depending on the characteristics of the client base, transaction structure and buyer demand.
That means a book generating $100,000 of sustainable annual recurring revenue could have an indicative value of approximately $400,000–$500,000.
But the revenue multiple alone tells only part of the story.
Client age, funds under advice, average balance, contribution behaviour, retention, provider concentration, adviser dependence and the quality of your client information can all materially influence what a buyer is willing to pay.
KiwiSaver book valuation example
Example only
- Annual recurring KiwiSaver revenue
- $120,000
- Indicative multiple
- 4.0×–5.0×
- Indicative value
- $480,000–$600,000
This is not a guaranteed valuation.
A strong book could attract greater demand while a book with weaker underlying characteristics could be worth materially less.
Why can KiwiSaver books attract higher multiples?
The economics of a KiwiSaver book differ from a mortgage trail book.
Mortgage balances generally reduce as borrowers repay debt. That difference is set out in more detail in how mortgage trail books are valued.
KiwiSaver balances have the potential to increase over time through:
- ongoing employee contributions
- employer contributions
- government contributions where applicable
- investment returns
This means the underlying asset pool associated with a well-retained KiwiSaver client base has the potential to grow over time.
That can make sustainable KiwiSaver recurring revenue particularly attractive to buyers.
Published New Zealand adviser-industry commentary has also referenced KiwiSaver trail valuations around the 4×–5× recurring-revenue level.
Again, this is a guide rather than a rule.
What actually determines the value of a KiwiSaver book?
The best way to think about valuation is:
Revenue tells the buyer how large the book is today. The underlying clients tell the buyer what it might be worth tomorrow.
Here are some of the factors that matter.
1. Funds under advice
Recurring KiwiSaver revenue is generally linked in some way to the assets associated with the client base.
A buyer will therefore want to understand:
- total funds under advice
- average balance per client
- distribution of balances
- recent growth
- concentration among larger clients
A $100,000 recurring revenue book supported by a diversified group of steadily contributing clients can look quite different from one heavily dependent on a small number of large balances.
2. Client age
Age can have a major effect on the expected life and growth profile of a KiwiSaver book.
A younger client may:
- contribute for decades
- increase their income over time
- increase contribution amounts
- build a substantially larger balance before retirement
An older client approaching retirement may have a shorter period of ongoing accumulation and a greater likelihood of withdrawals.
That does not make older clients bad clients.
It simply changes the future cash-flow profile a buyer is acquiring.
3. Contribution behaviour
A buyer may want to understand whether clients are:
- actively contributing
- on contribution holidays
- making additional voluntary contributions
- receiving employer contributions
- regularly engaged with their KiwiSaver strategy
The quality of the future revenue stream matters just as much as its current size.
4. Client retention
A high valuation assumes the buyer actually retains the clients.
Historical retention is therefore critical.
A client base with strong engagement, regular reviews and longstanding relationships generally creates greater confidence than one where clients have received little ongoing communication.
Useful indicators may include:
- historical churn
- transfer-out rates
- frequency of reviews
- length of client relationships
- recent client contact
- responsiveness to adviser communication
A strong transition process can also materially affect retention after settlement.
5. Provider concentration
A KiwiSaver book concentrated entirely with one provider may have different characteristics from a diversified book.
Concentration is not automatically negative.
It can make administration simpler.
But a buyer may want to understand:
- why that provider was used
- whether the relationship is transferable
- whether revenue terms could change
- whether provider-specific requirements apply
6. Revenue concentration
Client concentration matters as well.
Imagine a $200,000 recurring-revenue book where the top five clients represent 5% of revenue.
Now compare it with a $200,000 book where the top five clients represent 35%.
The second book carries greater concentration risk.
Losing several large relationships could materially affect the buyer's expected return.
7. CRM and data quality
Good information reduces uncertainty.
For a KiwiSaver client base, useful information may include:
- client age
- contact details
- provider
- current balance
- contribution rate
- annual recurring revenue
- last review
- next review
- adviser notes
- risk-profile information where appropriate
- other advice relationships
The exact information available will vary.
The principle does not:
The easier it is to understand the book, the easier it is to value.
8. Adviser dependence
Some advisers have incredibly strong personal relationships with their clients.
That can be one of the reasons the business has performed so well.
But a buyer also needs to know whether those relationships can be transferred.
If the seller is prepared to provide:
- personal introductions
- joint client communications
- selected client meetings
- a structured handover period
that can reduce perceived transition risk.
9. Other advice relationships
A KiwiSaver client may also receive:
- investment advice
- insurance advice
- mortgage advice
- broader financial planning
Those additional relationships may make the client more valuable strategically.
However, each revenue stream should still be understood independently rather than simply applying the KiwiSaver multiple to every dollar the client generates.
Why does a 4× multiple make economic sense to a buyer?
A buyer paying 4× recurring revenue is effectively paying four years of today's revenue upfront before considering expenses, client attrition, funding costs or growth.
They therefore need confidence that the revenue has a sufficiently long and stable future life.
That is why buyers analyse far more than the latest commission statement.
The higher the multiple, the more important retention becomes.
Does a growing KiwiSaver book deserve a higher multiple?
Potentially.
A buyer may value historical growth positively where it can be clearly explained by things such as:
- ongoing contributions
- increasing balances
- strong retention
- sustainable adviser engagement
However, buyers will distinguish between organic growth in the existing book and revenue created by new clients who require continued active acquisition.
Remember that the purchaser is primarily paying for the existing client base and its future economics.
What can reduce the value of a KiwiSaver book?
Potential concerns include:
- poor historical retention
- large numbers of disengaged clients
- incomplete client records
- unusually high client concentration
- very old client demographics
- significant expected retirement withdrawals
- unexplained revenue decline
- provider concentration risk
- substantial dependence on the selling adviser
- compliance or documentation concerns
- limited evidence of ongoing client service
Many of these issues can be improved before a sale.
How can you increase the value of your KiwiSaver book?
If you are several years away from selling, consider focusing on:
- Keep your data clean Maintain accurate client and provider records.
- Maintain regular client contact Demonstrate that relationships are active.
- Understand your demographics Know your client ages, balances and retirement profile.
- Track retention Be able to demonstrate historical persistency.
- Reduce owner dependence Build processes and communications that can survive a change of adviser.
- Document your servicing proposition Show a buyer exactly how clients are currently looked after.
- Plan the handover A credible transition plan can give a buyer greater confidence that the clients will stay.
Each of these is covered in more depth in seven ways to increase the value of your client base before you sell.
Do you have to sell the whole book?
No.
An adviser may choose to:
- sell an entire KiwiSaver client base
- sell a particular segment
- reduce client numbers
- exit KiwiSaver advice while retaining other advice services
- transition clients as part of broader succession planning
A partial sale can sometimes provide a better strategic outcome than selling everything.
Headline value versus transaction structure
Imagine a $100,000 recurring-revenue KiwiSaver book.
Buyer A offers
4.5× = $450,000 paid at settlement.
Buyer B offers
5.0× = $500,000, but $150,000 is dependent on future client retention.
The second offer has a higher headline valuation.
Whether it is actually better depends on the conditions attached to the deferred amount.
When comparing offers, look at:
- cash at settlement
- deferred consideration
- retention thresholds
- earn-out periods
- seller obligations
- restraints
- adjustments for lost clients
- security for deferred payments
Price and structure should always be considered together. How to sell a financial adviser client book in New Zealand sets out where in the process each of these is normally settled.
Frequently asked questions
What multiple do KiwiSaver books sell for in New Zealand?
There is no universal multiple. As an indicative starting point, The Client Base uses approximately 4.0×–5.0× annual recurring KiwiSaver revenue, subject to the quality of the book and the structure of the transaction.
Why are KiwiSaver multiples higher than mortgage trail multiples?
A significant reason is the different underlying revenue profile. Mortgage balances naturally amortise, whereas KiwiSaver assets have the potential to grow as clients continue contributing and investment balances increase.
Does client age affect a KiwiSaver valuation?
Yes.
A client's expected contribution period, retirement timing and likely future withdrawals can all affect the expected life of the revenue.
Age should be assessed alongside balances, contribution behaviour and other client characteristics.
Are KiwiSaver books easy to sell?
Quality KiwiSaver books can attract significant buyer interest, but every transaction depends on price, client quality, provider arrangements, transferability and the seller's expectations.
Do I need to be retiring to sell?
No.
Some advisers sell a segment of their book, reduce client numbers or exit a particular advice category while continuing to operate elsewhere.
Can I find out what my book is worth without listing it for sale?
Yes.
A confidential market appraisal can simply be used for planning or succession purposes.
Indicative information only. Actual market value can fall above or below the ranges discussed depending on client characteristics, revenue quality, transaction structure and buyer demand. This content is general information and is not legal, financial, accounting or tax advice.
