Almost 40 per cent of financial planning and accounting firms believe they will boost profitability by at least 20 per cent in 2014, while cutting back the number of clients they service.
Preliminary results from the Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey reveal that 83 per cent of advisers expect to grow profits in the next 12 months. This comes as the average advice business is set to record a 15 per cent increase in revenue and a 45 per cent increase in average operating profit for 2013.
In addition to these top line measurements, direct expenses remained fairly steady while the average revenue per adviser increased.
The report, which will be released early next year, also found advisers reduced the number of clients they serviced to 153 clients, down from 185 in 2012. Additionally advisers have a higher proportion of active clients, up to 77 per cent compared to 69 per cent in 2012.
According to Fiona Mackenzie, head of Macquarie Practice Consulting, advice practices were able to control their expenses during 2013 which contributed to them steadily growing revenue and gross profit.
“Expenses appear to have been well managed, which can contribute to driving profit improvements,” she said.
“Practices are still controlling costs but the survey suggests that some practices are feeling confident enough to invest back into their businesses.”
“Advisers have told us they want to spend more time with clients who genuinely value their advice. From the survey, we can see that many appear to be making real efforts to refine their client base and increase the focus on active clients, and this tends to improve the profitability per client.”
Among other findings, younger practices are one of the most confident, with businesses under three years old also expecting to boost profits by at least 20 per cent in 2014.
