Higher salaries ahead in a ‘watershed moment’ for advice
New research from Adviser Ratings has revealed a majority of financial advice practices are enjoying increased profit margins, heralding a new era of salary growth, stability and innovation for the profession.
Early data from the Adviser Ratings Landscape report, set to be released in April, has provided signs that financial advisers can expect pay rises this year.
“As we forge ahead into 2024, the financial advising sector is witnessing a remarkable transformation. This year is not just another tick on the calendar but a watershed moment for the industry, marked by rising revenues, stable costs, and improved insurance terms,” the firm described.
The research has discovered that over 60 per cent of financial advice practices are enjoying profit margins above 20 per cent – a figure which includes owners’ salaries, Adviser Ratings noted.
Moreover, average rises in advice practice revenue is surpassing 5 per cent, while more than one-third (35 per cent) of firms are experiencing a “remarkable” 15 per cent surge in revenue.
“This uptick in revenue isn’t occurring in a vacuum; it’s a reflection of the increased value and demand for professional financial advice,” the firm remarked.
“This financial health is creating a ripple effect, particularly in the realm of adviser salaries. As practices become more prosperous and strategy-driven, the demand for skilled advisers is soaring, making it an auspicious time to be in the industry.”
The changing state of professional indemnity (PI) insurance is another driver leading to higher salaries for advisers, the research found.
More nuanced and data-driven approaches to underwriting have seen “significant premium improvements”, according to Richard Silberman, managing director and founder of Numerisk.
Silberman believes 2024 will be a crucial year for advice businesses to reconsider their PI insurance and reset cost bases.
“At a minimum, premiums should be flat with substantial improvements in excesses and coverage or considerable reductions,” he said.
This trend, coupled with higher profit margins and more stable operational costs, creates the ideal combination for higher salaries in advice this year.
Advisers have become more than just financial experts, Adviser Ratings writes, but are in high demand as “strategic assets” for firms looking to grow and enhance client engagement.
The firm continued: “For financial advisers, both seasoned and new entrants, this is a clarion call. The market conditions are aligning in a way that favours skill, innovation and strategic planning.
“2024 stands not just as another year, but as a milestone in the financial advising industry. It’s a year that promises growth, stability and innovation. For advisers and practice owners, the message is clear: embrace the opportunities of this turning point, and be part of shaping a prosperous future for the industry.”
Earlier this week, Money Management compared the salaries earned by financial advisers in different states with those earned by accountants.
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Jasmine Siljic
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