Business performance gives planners cause for optimism
Improved performances across a range of metrics are giving financial planners reasons to be optimistic according to the latest Investment Trends Planner Business Model Report.
The research found that planners had experienced an increase in profitability and client numbers in the year to the end of May 2014.
Investment Trends senior analyst, Recep Peker, said the data highlighted a number of positive trends in the sector including a decline in the cost of providing advice to clients.
"Our most recent study sees the average number of active clients serviced annually by planners edging upward, from a low of 141 in 2012 to 147 this year," he said.
"Rising markets and recovering client numbers are lifting assets under advice and hence revenue.
"Planners have maintained a tight control over costs, with the average cost of delivering full advice falling from $2400 in 2013 to $2250 this year.
"This has certainly contributed to 72 per cent of planners citing improved practice profitability this year, up from 59 per cent saying so in the previous study."
While planners' profits had increased in the last 12 months, the report found that an increased number were looking to switch dealer groups in the year ahead, a trend that Peker attributed to their overall satisfaction with their current dealer group.
"We began measuring dealer group satisfaction for the first time in this years' study, and found that planners working in majority independent dealer groups had higher levels of overall satisfaction compared to those working in bank or institutionally aligned dealer groups," he said.
"As expected, dealer groups that have more satisfied planners typically have a smaller proportion planning on leaving."
The report also found that while 72 per cent of planners had identified the impact of the Future of Financial Advice reforms as a challenge for the sector, demonstrating value for money and improving business efficiency was seen as the biggest issues for the industry.
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