The average advice practice produces $1.1 million in revenue, while the average size was 6.8 full-time employees, according to a survey by Iress.
Iress’ inaugural Advice Efficiency Survey, which surveyed 113 advice firms, found practices were made up of an average of 2.3 working advisers and 4.5 support staff.
Advisers averaged 133 clients with six client meetings per week, with a total average of $83.4 million in funds under management.
Advisers used two to three technology platforms to produce advice documents and it typically took them 8.1 hours to produce a simple statement of advice (SOA) for a new client, while a complex one took 14.6 hours.
Some 72% of financial advice businesses expected growth in the short-to-medium term but almost two-thirds (60%) said compliance and legislative requirements would be the greatest impediment to this growth alongside finding good people/advisers (32%).
Advice businesses were nearly unanimous that their operating models needed to change with just 6% believing they would be operating in the same way in three years’ time.
Many advice practices wanted to focus on creating more scale in their business in order to achieve growth, however 57% were frustrated with manually entering client data into two or three different technology platforms.
Andrew Walsh, Iress chief executive, said the survey results clearly showed advice businesses were optimistic about the future.
“Despite a narrow focus on registered adviser numbers as the sole measure of the health of the industry, advice businesses remain confident of future growth and are seeking to change their practices to scale,” Walsh said.
“The research found that successful advice firms are achieving scale by optimising their processes and harnessing technology to unlock potential and work smarter.
“This is enabling them to provide advice faster, which equals more opportunity to generate revenue.”
Walsh said newer advice practices were also reaping the benefits of their technology investment, including higher adoption of tools like portals to engage with clients at scale and producing advice documents more quickly.
The survey found the average technology spend per full-time employee was $12,900 and 13% of advice firms were using more than four different technology platforms to produce a statement or record of advice.
“These newer practices are also focused on training their people to get the most out of technology,” Walsh said.
“Australian advice practices are going through an unprecedented period of change driven by regulation, demographics, markets and competitors, and technology can be an important ally to help practice owners adapt and thrive, now and in the future.”
Iress commissioned practice development consultancy Business Health to conduct the research.
