The financial advice profession is in good health although challenges around staffing and use of technology remain, according to the latest Business Health By The Numbers report, developed in conjunction with the Financial Advice Association Australia (FAAA).
The average revenue per client for financial advisers is $3,852, an increase of eight per cent since 2020, while the number of clients per adviser sits at 141.
Practice profitability also remains strong and suggests that, notwithstanding the turmoil and uncertainties of the past two years, Australian practices have held up well.
Salaries take up almost half of practices’ revenue (44.9 per cent) but finding the right people continues to be a challenge. Competition for talent remains stiff and two-thirds of practice owners indicate they will be looking to hire in the coming 12 months.
Encouragingly, client satisfaction ratings have remained at the same high level over the past few years, at 4.3/5, showing that advisers have dealt well with challenges such as COVID-19, ongoing regulatory change, and declining numbers of advisers in Australia.
Business Health principal, Rod Bertino, says the overwhelmingly positive feedback from clients suggests they are truly happy with their advisers.
“This result is to the great credit of financial advisers who have grappled with a number of challenges in recent years.
“However it is important that they continue to focus on their clients and providing them with great service and advice.
“Without clients, you don’t have a business and, without satisfied clients, your business is at risk. As such, it’s simply best practice to regularly seek feedback from your clients in an objective, independent way so you know how satisfied they are with you and your service.
“If you haven’t undertaken a client satisfaction survey in within the past 24 months, we strongly suggest that you do so.”
One area of notable change is in the number of support staff per adviser. This has risen from 1:1 in 2020 to 1.5 per adviser in the most recent report, suggesting a shift in responsibilities and roles within practices.
“This may be an area that practice owners should review,” says Mr Bertino. “A higher ratio could suggest areas where greater efficiency could be achieved. On the other hand, a lower ratio could mean that advisers are doing some of the admin work and not making best use of their time.”
Tania Milnes, general manager, memberships at FAAA, says the report shows a profession with a bright future, notwithstanding the ongoing challenges.
“We know that operating a successful practice has become increasingly challenging in recent years, as advisers balance the need to be sustainable and profitable with the regulatory red tape and the cost of providing advice.
“It doesn’t surprise me to see that advisers have risen to the challenge and have continued to provide quality advice to Australians.
“Australia now has the highest standards in the world for the provision of financial advice. The move to professionalism has been a very positive development for clients. Our financial system has become so complex that it’s almost impossible to navigate alone and quality professional financial advice is essential.”
