Planner profits up, client numbers down
Financial planning practices have experienced a healthy increase in both profit and revenue, while client numbers decrease, according to the Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey.
The survey, which collected data from 266 financial planning practices in October this year, showed that there was a 15 per cent increase in average revenue since the last survey, while average operating profits went up 45 per cent over the same period.
Furthermore, direct expenses have remained fairly steady, said Fiona Mackenzie, head of Macquarie Practice Consulting.
"Expenses appear to have been well managed, which can contribute to driving profit improvements," Mackenzie said.
"Practices are still controlling costs but the survey suggests that some are feeling confident enough to invest back into their businesses."
Meanwhile, client numbers per adviser have reduced in the last 12 months — from 185 clients per adviser in 2012 to 153 this year.
Looking at the evidence of profit and revenue growth, this could be a good sign that many are having success with this strategy, Mackenzie said.
"Advisers have told us they want to spend more time with clients who genuinely value their advice," she added.
"From the survey, we can see that many appear to be making real efforts to refine their client base and increase the focus on active clients, and this tends to improve the profitability per client."
The survey was mostly completed by practice principals, who have also shown increased optimism, anticipating an increase in profit in the New Year.
Practices that offer financial planning only or financial planning and accounting are the most positive, with a larger proportion expecting at least a 20 per cent increase in profit in the next financial year (32 per cent and 39 per cent respectively).
Younger practices are also confident, with half of firms under three years old believing they will do the same.
Recommended for you
Far too few wealth managers are capitalising on the opportunity presented by disruptive technology to deliver personalised investment solutions to the mass affluent demographic, according to PwC.
With over half of advisers using managed accounts, HUB24’s head of managed portfolios has unpacked the benefits driving their usage and how they can be leveraged by advice practices.
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
ASX-listed platforms HUB24, Netwealth, and Praemium have used their AGMs to detail how they are using artificial intelligence to improve their processes and the innovative opportunities it presents.
