Most advisers see increased costs
Three quarters of financial advisers have found their costs have increased in the last five years, according to Elixir Consulting.
Preliminary findings of the firm’s fourth edition of the “Adviser Pricing Models Research Report” also included the fact that costs had remained steady for 17 per cent of advisers.
The report also found that while the average earnings before interest and tax (EBIT) that advisers were targeting (after a normalised salary to principals of $150,000 per annum) was 35 per cent, the average actually being achieved currently was only 13.5 per cent.
The businesses who were achieving over 30 per cent EBIT averaged 27 new clients in the past year, and the sources of these new clients were through receiving referrals from clients without asking for them, and “referral sources that send clients our way”.
The report also found changes in the way advisers were charging for risk advice, with advisers implementing different techniques.
Elixir Consulting managing director, Sue Viskovic said: “We have certainly found more advisers are charging some iteration of fees for their risk advice, and the numbers of those replacing commissions with fees have lifted from the last report two years ago”.
The firm was still conducting online surveys to compile the report, and said it was looking at issues such as what advisers charged for aged care advice, at what point in the advice process advisers positioning initial and ongoing fees, and what differentiates high profit firms from those not reaching target margins.
AUTHOR
Malavika Santhebennur
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
