Australia’s financial advice industry is facing a deeper capacity and profitability crisis than previously recognised, according to interim research released by consultancy Elemnta in partnership with Marshan Consulting.
The findings, which were published last week, point to data inefficiency and implementation errors as being two of the most significant barriers to advice accessibility, growth, and sustainability across the sector.
Elemnta’s 2025 Adviser Efficiency Analysis suggests that advisers are spending far more time on non-advice work than they realise, revealing what the firm describes as a “41 per cent perception gap” between what practices believe they spend on administration and what they actually do.
According to the interim data, advisers estimated around 45 per cent of their time was consumed by non-advice operations such as compliance, administration, and implementation. In reality, the figure is closer to 86 per cent.
This discrepancy has material consequences as firms that misjudge how they spend their time risk mispricing services, misallocating staff, and ultimately undercutting their own profitability.
Elemnta CEO Shaun Green described the findings as “a confronting set of numbers”, arguing that inefficiency has quietly become “the largest cost centre in advice”.
“The early results confirm that inefficiency has quietly become the largest cost centre in advice, as firms face far greater profit and practice burdens than we first thought,” Green said.
“The perception gap itself is alarming — the gap between what practices think they spend on administration, compliance and implementation, and the reality. Interim data shows a clear trend towards advisers either overcompensating for or grossly underestimating the drain of time from non-advice effort. This underscores why some advice businesses are barely profitable – if at all.”
The report highlights retirement strategy implementation as a major pain point, with advisers absorbing error rates from product and platform providers that range between 12 per cent and 42 per cent, depending on complexity. These implementation errors, the research estimates, cost practices an average of $22,400 per 100 clients each year — losses that stem not from poor advice, but from inefficiencies in executing advice strategies with counterparties.
Given retirees and pre-retirees are the largest client cohort for advice firms, the implications are significant. The research suggests the sector is leaking both time and money at a scale that could compound the already growing shortfall in adviser capacity.
The study also found stark performance differences between product types. Applications through modern investment platforms take around 8 hours and cost about $760 each, with a rejection rate of 12–18 per cent. By contrast, applications involving industry funds take more than twice as long — 17 hours on average — and cost roughly $1,645 per application, with rejection rates climbing as high as 35 per cent.
This efficiency divide means adviser profitability may vary significantly depending on which providers they engage with, adding another layer of complexity to an already strained system.
The findings arrive at a time when the advice sector continues to grapple with heightened regulatory oversight, declining adviser numbers, and a growing advice gap as demand outpaces supply.
“These early figures are a confronting set of numbers, and we felt it necessary to release them now to begin focusing the entire advice ecosystem on understanding the scale and implications of the problem,” Green said.
