financial advice

Advice practices focused internally to survive

advice practices improvements

Improvements to the operation of their own business has helped advice practices to survive regulatory change, according to a new survey.

Investment in new technology and improvements in business processes along with increased numbers of support staff have helped financial advice practices deal with regulatory change and boost profitability, according to a new survey conducted by a global asset manager.

Dimensional Fund Advisors stated its tenth Global Adviser Survey, which covered 740 advice firms worldwide, including 75 in Australia, and examined revenue growth, client retention, employee retention, profit margin and revenue per adviser, found practices had focused on making improvements to their own work to deal with ongoing change.

Dimensional Australia client croup co-head Nathan Krieger said: “The picture we get from firms we survey with is that years of advisers working on the business, as opposed to in the business, is finally starting to bear fruit.

“There’s definitely a greater sense of optimism now than there was a few years ago.

“Part of the success is coming from improving efficiencies and implementing technology, but also from growing their client service support personnel significantly faster. That’s allowing higher-performing firms to service more clients per adviser without losing quality.”

The survey found higher-performing advice firms saw, in the past year, an average 19 per cent year-on-year growth in revenue, as opposed to 14 per cent among other local firms, and higher-performing firms also generated more revenue per client household at about $8400 versus $7400.

Additionally, higher-performing firms were providing a wider range of services, such as tax, retirement and insurance planning, to a larger percentage of their clients, with the survey finding, on average, a senior adviser at a high-performing firm was servicing 173 households, compared to 122 households at other local firms.

Dimensional Fund Advisors also noted in comparison to global firms, Australian financial advice practices were much less reliant on merger and acquisitions as a source of growth and less likely to pay staff compensation through performance bonuses.

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