Advice firm average revenues rise to $1.6m: Iress

Driven by technological efficiencies, advisers are doing more with less and witnessing increased profitability, according to a survey of over 120 practices.

The latest Financial Advice Efficiency Report, produced by Iress in partnership with Business Health, has found average total revenue grew from $1.1 million in 2021 to $1.6 million in 2023.

This comes even as average full-time hours declined slightly from 6.8 in 2021 to 5.6 this year, indicating higher levels of efficiency.

According to the findings derived from 122 advice practices in Australia, the most efficient firms take a ruthless approach to how they use technology. 

“High-performing financial advice firms incorporate workflow management, password management, revenue management, portfolio management, and client engagement applications into their business management processes but use fewer platforms to do so,” the report stated.

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The most profitable advice practices use fewer software applications and communicate more with their clients, with practices communicating with their clients over 10 times per year boosting profitability by up to 114 per cent. 

The strategic use of a limited number of software applications streamlines internal processes, reduces complexity, and minimises the potential for errors or inconsistencies in client data management and advice preparation.

“This results in greater operational efficiency and better productivity, which ultimately contributes to the overall success and profitability of these firms,” the report added.

On average, practices with a fully automated review process take around 2.1 hours to prepare a review document for an existing client, compared to 5.5 hours for practices with no automation. 

Additionally, they take three hours, rather than 5.3 hours, to prepare a client review document for a new client. 

However, just 16 per cent of advice firms surveyed are running with a fully automated review process, offering a clear opportunity for improved efficiency for the remainder.

“Our research shows that automating your advice documents and review process is generally a good place to start. Automating the manual tasks that slow you down should create more time for you to focus on the parts of the advice process where the personal touch matters most: client engagement,” the report said. 

Compared to 2021, the average number of tech-related training hours allocated per month per adviser was on the rise, now standing at 3.6 hours compared to 2.7 hours previously. 

Over half (58 per cent) of practices said they are looking for advanced training to help leverage their investment in technology. Twenty per cent are looking for support from their licensee towards this.

Interestingly, while technology adoption is on the rise, over half (55 per cent) of practices still don’t offer the convenience of digital signing.

Among advice practices’ top technology challenges are cyber and data security, the time it takes to produce advice documents, and integration of applications. 

A quarter (31 per cent) said quicker SOA generation would be one aspect of their advice software they would like to improve. This was followed by client online portal functions (17 per cent), fact-finding (9 per cent), advice documents (7 per cent), and reporting and outputs (6 per cent).