What A Sale Of H.D. Vest Says About The Accounting Channel Hot

First, the accountant advisory business is still fragmented. H.D. Vest is the biggest advisory-oriented retail accounting chain out there, but only has about 5,200 advisors nationwide.

Second, the tax prep side has seen better days. The traditional bread and butter for a lot of CPAs, the old April 15 revenue cycle has come under pressure from automated Web return preparation -- and the financial advisors who prepare returns at a nominal fee probably don't help.

Third, on the brokerage side, these advisors have a hard time squeezing much out of limited AUM. With $26 billion on the H.D. Vest Investment Securities platform, that's only around $5 million per advisor. From that money, they derived maybe $10,400 in management fees every year for a fairly narrow ROA of 0.2%.

Now if Wells Fargo wants to sell the unit now in order to "optimize" its wealth management business, that shows us that a 0.2% ROA may be too low to take a firm like H.D. Vest into the future.

However, Wells Fargo also reportedly wants $200 million for the firm. That's practically double what WFC paid for it back in 2001 and a full $27 million more than even the company's accountants say it's worth -- counting a whopping $104 million in goodwill.

Does a 15% premium make sense here? Who will buy?

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