The key features of advice practices growing their profitability
Those financial advice practices which are seeing the strongest profitability and revenue growth share four similar characteristics in how they run their businesses.
The latest Adviser Ratings 2025 Financial Advice Landscape report found the majority of practices are experiencing a surge in profitability this year, with only 3 per cent of practices seeing their revenue decline.
Previously, Money Management covered how a subsector of advice firms are able to generate an average revenue of more than $5 million, while over half of all practices are generating profitability of 20 per cent or more.
Expanding on this, Adviser Ratings clarified the characteristics that these high-performing advice practices share.
These are:
- Strategic growth focus.
- Technology integration and AI adoption.
- Sophisticated investment approaches.
- Formalised business planning.
Successful practices are those which target specific client types in a certain demographic, which allows them to tailor their service quality and operational efficiency rather than trying to be everything to all clients.
This is especially the case if they are a larger firm, with over three-quarters of firms with five or more advisers saying they pursue targeted client acquisition compared to just over half of solo advisers.
Regarding technology, successful firms are using this to reduce their staffing needs and reshape their core practice functions, including via the use of artificial intelligence.
“This efficiency gain is evident in staffing ratios, with the average practice now employing fewer administrative support staff, down a further 0.11 customer service staff per adviser since 2024, and a 20 per cent reduction in internal paraplanning resources. This adaptability and resilience of the industry should reassure us all about its future.”
As well as the use of technology to reduce staffing, the use of investment consultants and third-party experts is also on the rise with 22 per cent of firms saying they have increased their use of these. This allows firms to focus resources on their client relationships rather than investment selection.
Finally, these business owners are demonstrating increased professionalism with business plans being in place at three-quarters of firms and an increase by a third year-on-year in the number which are regularly updated.
“This commitment to structured planning is not just a formality, but a strategic move that provides a framework for sustainable growth and profitability.”
AUTHOR
Laura Dew
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