Adviser Ratings has shared the characteristics of leaders from top advice firms.
A top advice firm is described as one with a profit margin of more than 40 per cent and which is actively expanding its client base. To achieve this, this practice needs to be bringing in a six-figure revenue above $1 million.
While the vast majority (78 per cent) of advice practices overall have seen revenue growth in the past year, optimal practices are enjoying a 15 per cent rise in revenue.
The research firm said “scale, specialisation and technological sophistication” are necessary to create an advice firm with a competitive advantage in the market.
This includes developing their own M&A strategies to fill out these extra specialisations as demonstrated by licensee group Sequoia acquiring national paraplanning service Clique Paraplanning and Count’s equity partner firm taking stakes in accountancy businesses.
They should also think about their relationships with clients by building a client-centric culture focused on client outcomes, provide regular client feedback, invest in client education, and develop tailored service models for different client groups.
Much of this could be facilitated by the use of technology via data analytics for improved client insights, automated processes to enhance the client experience, and digital tools for client engagement.
Earlier this week, an ASIC report identified licensees are using artificial intelligence for customer engagement, customer value proposition and for marketing communications. This is enacted via chatbots, cash flow forecasting and budgeting tools, and optimised marketing communication with clients from AI.
Adviser Ratings wrote: “The transformation of the advice landscape presents unprecedented opportunities for practices with the right leadership approach. Those who combine strategic growth with operational excellence and technological innovation are positioned at the forefront of the profession’s evolution.
“The key to success lies in adopting new technologies, expanding service offerings and, most importantly, fostering leadership that can drive meaningful change while focusing on core client outcomes.”
In order to lead a top-performing advice firm, Advisers Ratings said an individual needs to:
- Maintain a clear growth strategy while being selective about opportunities.
- Invest in technology and process efficiency.
- Build diverse, inclusive teams.
- Develop specialised expertise while maintaining strategic partnerships.
- Stay current with evolving challenges and opportunities.
- Foster a culture of innovation and continuous improvement.
- Balance growth with sustainable operations.
- Maintain focus on client outcomes while driving business success.
Earlier this year, the firm’s Advice Landscape Report 2023–24 found the average practice has $225 million in funds under advice (FUA), while the average adviser has $89 million in FUA.
Typical advice firms are sized between one and 10 advisers, with this segment accounting for over one-quarter of the entire profession. Practices with 11–100 advisers make up 21 per cent, followed by businesses with 100 or more advisers at 20 per cent.
Looking at the typical advised client, the average age is 58 years old and is charged an average annual fee of $4,300.
