The financial advisory industry in Australia is experiencing notable changes, particularly in how companies and practices plan to adjust the number of financial advisers they employ. According to a recent survey, businesses were asked about their future plans regarding adviser numbers. The responses reveal interesting trends when comparing data from 2023 to 2024, as shown in Figure 1 below. Notably, more companies plan to maintain stable adviser numbers while leveraging technology for efficiency.
Figure 1: Practices’ Plans for Adviser Numbers
Source: Adviser Ratings (Note - outer donut=2024, inner donut=2023)
There has been a noticeable shift in the industry's approach to growth and staffing. In 2023, many companies were more inclined to expand their adviser teams through organic growth and acquisitions. However, in 2024, a more conservative approach is emerging. Fewer companies are looking to increase their adviser numbers aggressively, instead focusing on maintaining current levels. This shift suggests that firms are becoming more cautious and possibly more strategic in their expansion plans, potentially in response to market conditions or other external factors.
Additionally, technology and artificial intelligence (AI) are increasingly influencing how companies make strategic decisions about adviser growth. In 2024, firms are incorporating advanced technological tools and AI into their planning processes. These technologies offer enhanced data analytics capabilities, enabling companies to make more informed decisions about when and how to expand their adviser teams. By leveraging AI, firms can better predict client needs, optimise resource allocation, and streamline operations, which helps in aligning adviser growth with overall business performance and market trends.
These shifts indicate a cautious approach in 2024, with more companies opting to maintain their current adviser levels rather than pursue aggressive growth strategies. This trend could be reflective of broader economic conditions or industry-specific challenges. The stability in acquisition plans suggests that mergers and acquisitions are not the primary growth strategy for most firms, potentially due to the complexities and costs associated with such actions.
Additionally, there is a strong correlation between a company's recent performance and its plans for adviser numbers, as shown in Figure 2 below. Among companies that experienced a revenue decrease over the past 12 months, only 35% plan to increase their adviser numbers. In contrast, 63% of companies that saw revenue growth intend to expand their adviser teams, and none of these companies plan to reduce their adviser numbers. This relationship underscores the impact of financial health on strategic staffing decisions.
Figure 2: Revenue and Advisers Growth
Source: Adviser Ratings
A similar pattern emerges when examining the acquisition of new clients over the previous 12 months. Companies that successfully acquired more clients are more likely to increase their adviser numbers. This trend highlights the importance of client growth as a driver for expanding advisory teams, suggesting that firms with growing client bases feel confident in their ability to support and benefit from additional advisers.
In conclusion, the Australian financial advisory industry is showing a trend towards stability in adviser numbers for 2024, with fewer firms planning significant increases compared to 2023. Companies that have seen positive financial performance and client acquisition are more inclined to grow their adviser teams, while those facing revenue challenges are more cautious. The integration of technology and AI into strategic planning further reflects a sophisticated approach to managing adviser growth, aligning it with evolving business needs and market conditions.
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