In November 2023, Iress and Business Health launched the Advisely Index, a benchmarking tool that measures advice professionals’ efficiency across four key metrics: advice production, servicing, execution and client engagement.
A year later, the Advisely Index Report delved into how the top-performers in advice are operating their businesses.
It discovered that the top 10 per cent of practices, based on the four above-mentioned metrics, service 186.9 clients per adviser, compared to 133.6 clients per adviser for the remaining majority of businesses – marking a 40 per cent difference.
Top advice practices have an average pre-tax profitability of 47 per cent, while the industry overall is at 38 per cent.
Research from Colonial First State (CFS) earlier this week found that advisers currently manage 110 ongoing clients each on average but are aiming to serve 152 clients in total. An additional 42 clients per adviser could lead to 650,000 more Australians receiving ongoing advice, CFS said.
Iress’ report also highlighted that the top-performing advice businesses conduct 6.9 client meetings per adviser each week, versus 5.8 for the overall average.
Frequent, proactive and personalised communication with clients is a key component to building strong relationships, according to Business Health, as only 27 per cent of firms contact their best clients 10 or more times per year.
This correlates with data from Adviser Ratings, which previously stated that the most optimal advice firms reported profit margins of 40 per cent or higher. To achieve such profitability, these practices need to bring in a six-figure revenue above $1 million.
Furthermore, top-performers in advice are 45 per cent quicker at producing basic statements of advice (SOA), 48 per cent quicker at producing complex SOAs, and 58 per cent quicker at producing review documents.
“The Advisely Index results demonstrate that Australian advice businesses are drawing on technology and automation to streamline their internal processes and produce advice documents quicker,” said Kelli Willmer, Iress chief executive for wealth APAC.
“While this is good news for the industry, there’s still a big opportunity to enhance efficiencies in the implementation of advice strategies, which could have significant impacts on the scalability and profitability of advice businesses.”
Echoing this, Business Health principal Rod Bertino commented that advisers who are harnessing technology to drive efficient processes are more equipped to service a growing client landscape.
He explained: “Advisers are operating in an increasingly competitive market, making efficiency an imperative for any advice business looking to expand its client base and stay competitive in 2025 and beyond.”
