Lifting revenue per client tops advisers’ priority list
Increasing revenue per client is a strategic priority for over half of financial advice businesses, a new report has found.
Colonial First State’s (CFS) 2024 Advice Practice Profitability Report, conducted by Empower Business Advisory, surveyed 300 financial advisers, paraplanners and support staff.
The research assessed financial advice firms’ strategic priorities for the next three years, with 54 per cent focused on increasing revenue per client and 50 per cent aiming to increase their capacity to serve more clients.
Other key priorities include simplifying operations and administration (44 per cent), reducing the cost of servicing and advising clients (41 per cent), and growing adviser numbers (29 per cent).
Advisers currently manage 110 ongoing clients each on average but are aiming to serve 152 clients in total. An additional 42 clients per adviser could lead to 650,000 more Australians receiving ongoing advice, CFS noted.
Recep Peker, who authored the report and is the founder and managing director of Empower Business Advisory, said: “We explored advisers’ strategic priorities for the next three years, and found increasing capacity to serve more clients annually is one of the industry’s top priorities.
“As part of this, advisers are aiming to simplify their operations and reduce the cost of servicing clients, while seeking to increase their revenue per client as an outcome of delivering greater value. Taken together, this shows clear intent to boost advice quality and business profitability while simultaneously getting advice to more Australians.”
With more than half of advice practices looking to improve their revenue per client, separate research has indicated one way that firms can achieve this.
According to Adviser Ratings, practices with comprehensive documented systems report 36 per cent higher revenue per client and 24 per cent faster advice delivery.
“The message is clear for practices serious about improvement: start with intentional design, build robust systems, and then leverage technology to enhance and scale those systems,” it described.
“All of this leaves more time and ability for the professional to be a professional, knowing that the documented process ensures everything else is systematically looked after in the business.”
This aligns with previous findings from Vital Business Partner’s 2024 Advice Operations Research Report, which identified documented processes as one of the key characteristics that bind top-performing advice practices together.
With some 37 per cent of advice practices failing to document their processes, firms that did record and define all processes reported higher earnings and greater efficiency overall.
Sue Viskovic, founder of Elixir and head of consulting at VBP, said: “As experienced business coaches, we know that fully tested and thoroughly documented processes are a critical step, if not an absolute must, to successfully streamlining and automating business operations.”
Other characteristics of top-performing advice businesses include having a healthy culture, hiring a dedicated practice manager, outsourcing tasks, using managed discretionary accounts, and engaging with an external business coach.
AUTHOR
Jasmine Siljic
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
