If you were to guess what the top-earning advice practices have in common, what would you say? The same type of client or client growth strategy? A certain management approach? Business structure? Internal support? Licensee category?
Several of those answers may be accurate, but analysis we’ve conducted shows there are two other attributes that practices bringing in a lot of money tend to have in common.
As part of the research for the annual Adviser Ratings Landscape Report, we survey practices from across Australia about their revenue, profitability, size and structure. We also ask advisers and practices about the nature of their business, including how they manage their practice day to day, what sort of tools help them succeed, and what they’ve done – and plan to do – to try to grow. From this data, we draw a number of conclusions, which are revealed in our newly released 2023 Australian Financial Advice Landscape Report.
From our deep dive, we can look at the commonalities among practices with high estimated revenue, to give other advisers insights into where to take their own business. Here are a couple of things that we’ve found practices with very high revenue do.
A matter of approach
Among practices earning an estimated $2.5 million in revenue or more, one of the standout differences was the approach to investment. Almost four-in-five in this category used an investment committee to make their decisions about how to invest client money last year, up from 65 per cent of top-earning practices in 2021.
Relatively few practices in any category rely on internal research teams, while goals-based investing was more prominent in lower-earning practices. Fewer than one in three practices in any revenue category adopt a flexible approach around their licensee’s ALP when it comes to investment.
Figure 1 – Practices’ approach to investment by estimated revenue 
Source: Adviser Ratings
The other key area of difference was how practices embrace digital tools, like robo-advice and personal finance management applications. Most practices that reported revenue of $2.5 million or more now use digital tools to collect data and improve efficiencies in their business. In contrast, just over one-in-five lower-earning practices use these applications for efficiency gains.
In fact, relatively few businesses in lower revenue brackets have embraced digital applications at all, with most low-earning practices reporting they don’t currently offer such tools.
Figure 2 – Practices’ engagement with digital tools by estimated revenue
Source: Adviser Ratings
While cost may be a barrier for lower-earning businesses, efficiency is consistently listed as a top priority of practices. We expect more businesses will invest in these tools in the future, especially as more providers come to the table.
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