The firm recently conducted its yet-to-be-released 2025 Global Advisor Study which explores characteristics of high-performing advice firms across the globe. Firms are defined by their revenue growth, client retention, employee retention, profit margin, and revenue per adviser.
Speaking to Money Management, Catherine Williams, head of practice management at Dimensional, was asked how Australian firms compared to global ones and singled out their conversion rates.
“When you look at the prospect conversion rate – which is how effectively you are closing business – high-performing advice firms in Australia have a high conversion rate,” she said. “This tells us they have got incredibly purposeful of who they work with, they don’t take on clients who aren’t a good fit, and they ask their clients for referrals.
“They are also onboarding new clients quickly and with a smooth, defined process for engaging with prospective clients, asking for that business and getting it closed. They are onboarding clients on average in 9.9 weeks compared to 10.3 globally, that might not seem like much but you are able to get clients to a place where you are charging and generating revenue quicker and, more importantly, the client feels incredibly cared for.
“If you are able to do the onboarding in a more concise fashion, have a higher closing rate and a fast onboarding process, then that is incredibly powerful.”
Last week, Morningstar research found failing to complete a task within a week is a major irritation of clients about their financial adviser.
However, Australian firms are typically smaller than global peers with 10 full-time employees compared to an average of 15 globally.
The importance of targeting the right type of clients for your firm is flagged as a major consideration to be a high-performing firm. Williams said Australian firms are “incredibly focused” on their client demographic. This ties into a desire to professionalise and scale up their financial advice practice rather than simply growing their business.
“Australian firms are incredibly focused on their clients and who can deliver the greatest value. They are refusing to take on clients who don’t suit their firm, and being systematic and disciplined with that.
“The days of servicing non-profitable clients are gone. Firms are getting clear on what they want to provide and the service they can offer. They get to a breakeven number on what is their cost to serve and the revenue they can get, and then charge their clients accordingly.”
Asked if she had any suggestions for how experienced advisers could terminate relationships with clients who were no longer profitable for them, she acknowledged it could be a hard discussion to have. She also added that these longstanding clients may bring in their own referrals, so it is not always in the best interest of the firm to terminate a relationship permanently.
“The vast majority of advisers, especially in Australia, get into advice because they want to help people, so when we ask about profitability, that can be hard to hear. But if you are an established firm, then you should be taking a look at your client lists and seeing who is driving the business forward and who is detracting.
“High-performing firms are transparent about their business model. We worry about having these conversations, but clients appreciate us being candid with them. Get candid with your clients and explain the relationship you offer might have to change. Maybe that’s via the service you offer them, maybe that’s via the use of technology, or maybe move to an associate adviser instead of a senior one.”
