While the past few years have been characterised by uncertainty and change, advice businesses are now at the point where they can start to accelerate their growth. There are a few reasons for this.
Practices have increasingly introduced systems to manage the compliance load, which has been a major pain point in the past. Analysis for the Adviser Ratings' Australian Financial Advice Report 2023 shows far fewer businesses are looking to enhance their compliance solution, with just 13 per cent of businesses listing this as a priority.
We’ve also seen businesses achieve greater scale as they take on a higher number of clients. In three years, the average number of clients per adviser has jumped by 16, to 119. High levels of demand from the Australian population and fewer industry colleagues are obviously driving this trend. As Figure 1 indicates, the average number of new clients varies by licensee type, with boutiques seeing the biggest increase.
Figure 1 – Average number of new clients, by licensee type
Source: Adviser Ratings' Australian Financial Advice Report 2023.
Note. Light blue = 2022; dark blue = 2021. Graph shows average number of new clients for practices within the different licensee size groups.
Finally, most of the profession’s current advisers have said they’re not going anywhere. After more than 12,000 departures in five years, numbers are stabilising. Last quarter, we saw the adviser universe grow ever so slightly for the first time since 2018. There are now just under 16,000 advisers in Australia.
So how are practices planning for the future? We asked businesses where they’re investing their time and money. Here’s what they told us.
Setting up for the future
Once again, almost half of the businesses we surveyed said they planned to invest in material process efficiencies. Doing more with less has been a recurrent theme in the past few years, with outsourcing and technology investment among the ways businesses have achieved these efficiencies.
In 2023, more practices plan to pursue new business opportunities. It was a top priority for 35 per cent of those we surveyed – a marginal increase on the year before. Similarly, we saw increases in the number of businesses planning to adopt a new IT solution or pursue merger and acquisition activity.
In other areas, however, practices say they’re content with the status quo. Just over one-in-five practices are planning on recruiting advisers (compared with almost one-in-four the previous year). Meanwhile, fewer practices plan to switch licensees or change their relationship with a service provider.
While there’s still work to do, many practices have indicated they’ve made the investments they need to grow their businesses. Given how many Australians want or need advice, that can only be a good thing.
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