Angus Woods

Over one-third of advice practices actively plan to take on more clients but it will most likely be at the expense of less profitable ones.

According to findings from the latest Adviser Ratings ‘Landscape Report’, these practices are clear on the type of clients they’ll recruit.

Adviser Ratings founder Angus Woods tells Professional Planner the client take-up comes off the back of practices that have spent the last few years finding partnerships or otherwise consolidating their business through scale.

“They already have the efficiencies in place to bring on more clients,” Woods says.

“When you peel back the data, they’re the types of practices that have done the hard yards over the last 12 to 24 months either through technology efficiencies and/or partnering with other practices and have more capacity.”

While the orphaning of clients is still happening, although it has slightly stalled, practices are showing a willingness to lose clients that aren’t profitable, Woods says.

“A lot of practices are taking on new clients, but they’re still jettisoning their non-profitable clients and that’s an ongoing theme we’re seeing,” Woods says.

The report found process efficiency is the top priority for almost all advice business and most practices feel they are on top of compliance, reporting a sharp year-on-year drop when it comes to seeking help in that area.

Additionally, adviser-to-staff ratio has increased significantly with businesses reducing their spending on outsourced paraplanning.

“The outsource versus insource paraplanning took a shift back to insourcing,” Woods says.

“I think the advisers are trying to feel a bit closer to the process and making sure they’re getting the Statement of Advice out quicker as opposed to an outsourced environment.”

Although the research found most advisers plan to stay in the industry a fifth have reservations and this is dependent on reform outcomes including the experience pathway which will give a carve out on the education standard for advisers with a decade of experience.

Slightly more open to advice

Some 80 per cent of Australians who want advice couldn’t afford to pay what the average adviser charges.

The report found the median cost of advice has risen 5 per cent to $3710, while under 20 per cent of Australians are willing to pay between $2500 and $5000 for advice. However, this is a 4 per cent increase compared to last year.

Woods says market conditions over the last couple of years has led to more Australians open to professional advice.

“There was a lot more stimulus in 2020/2021 which carried through and people started to invest in 2022 and saw the upheaval in the equity markets which is around the time we did the survey in January 2023,” Woods says.

The number of advised consumers has dropped from 13.9 per cent of Australians in the 2018 report to 10 per cent in the latest data.

The average client is 56, paying an average annual fee of $4250 and is most likely seeking out advice for building super and retirement.

In contrast, the average adviser is 49, degree qualified, makes $145,000, prefers to use model portfolios and listed investments.

Advanced tech

On the tech side of things, Woods observes there is a willingness for practices to “move around” when it came to their man advice software.

“We saw more advisers using multiple solutions this year, especially on the software side not platforms,” Woods says.

He adds advisers are more willing to “modularise their environment” by utilising different tech components, but not as much when it comes to platforms.

Despite rating poorly, Iress continues to be the most used advice software.

“Whilst Xplan is dominant in terms of market share, people are using alternative tools to supplement,” Woods says.

HUB24 dominated the best platform ratings, marking the highest score for best advice platform, best client experience, best adviser experience, best for new advisers, best functionality, best adviser support, overall investment options. Similarly, Lonsec swept all categories for best research house.

Worksorted was rated best advice CRM, while Product Rex was the highest for best advice software.

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