Strong revenue drives staff growth for advice practices
The majority of financial advice practices enjoying revenue growth have intentions to grow their adviser teams, indicating a strong correlation between the two factors.
The data from Adviser Ratings found those companies experiencing a rise in revenue were most likely to consider growing their advice teams.
It discovered that 63 per cent of companies seeing a rise in their revenue have plans to expand their adviser numbers. The remaining 37 per cent intend to maintain their current adviser levels.
There are no practices reporting growth in revenue that intend to decrease their adviser numbers.
Money Management previously spoke with two professionals who argued that advice practices with between four and six advisers are at the “magic number” to achieve maximum efficiency and greater work/life balance.
On the other hand, among companies that experienced a revenue decline over the past 12 months, just 35 per cent are looking to bring on more advisers. Half of these practices will maintain existing adviser levels and 15 per cent intend to actually decrease their adviser numbers.
For advice firms with flat revenue, 41 per cent have intentions to grow their adviser teams and 59 per cent are seeking to keep it at the same level.
“There is a strong correlation between a company’s recent performance and its plans for adviser numbers, underscoring the impact of financial health on strategic staffing decisions,” Adviser Ratings wrote.
Experts have discussed how scaling up as a smaller advice business can present several advantages, such as servicing a greater number of clients, but requires additional time and expenses.
Moreover, the research house observed a similar trend emerging when assessing the acquisition of new clients over the previous 12 months.
Advice businesses that grow their client numbers are understandably more likely to broaden their adviser numbers, emphasising the value of client growth as a vehicle for growing advisory teams.
“Companies that have seen positive financial performance and client acquisition are more inclined to grow their adviser teams, while those facing revenue challenges are more cautious.
“The integration of technology and artificial intelligence into strategic planning further reflects a sophisticated approach to managing adviser growth, aligning it with evolving business needs and market conditions.”
Overall, 41 per cent of practices are planning to preserve their current adviser numbers in 2024. Another 39 per cent are looking to grow their adviser base organically.
AUTHOR
Jasmine Siljic
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