Kon Costas

Principals’ Community managing director Kon Costas has hosed down ultra-high salary increase expectations for advisers.

Taking issue with a report from recruitment agency Robert Walters that stated pay for advice roles have increased 37 per cent over the last year in NSW, Kostas says this finding wasn’t reflected by the data collected by the Principals’ Community.

According to survey data from the community, the average adviser salary increase in NSW was 4.5 per cent, while the average senior adviser salary was 7.1 per cent.

“I’m sharing data of what’s actually happening year on year,” Costas tells Professional Planner, adding the community’s data should remove “some of the noise” around salary expectations.

The self-licensed adviser community, which became a standalone business after it was let go by BT in late 2021, has collected financial and qualitative data through its annual Business Insights program over the past five years.

The Principals’ Community supports more than 120 self-licensed financial planning businesses which authorise 1220 advisers. “There’s a genuine pool,” Costas says of the sample size – no licensee has more than 1000 advisers.

“How we collect the data is also very important – we’re dealing with the actual business owners that collect the data. When we send out surveys, we’re asking for data most advisers aren’t necessarily across unless they’re the actual owner of the business.”

The national average for salary growth in the community over the year was 6 per cent for advisers and 4 per cent for senior advisers, according to the data.

Costas says he doesn’t want to speculate on the likely year-on-year percentage change in salaries in the future but says the idea there will be high double-digit per cent increases isn’t realistic.

“I’m sharing data of what’s actually happening year on year,” Costas says.

“There’s going to have to be something out of the ordinary to show a significant increase to adviser salaries in year to year.”

FY23 adviser salary average

Location Associate Adviser* Adviser Senior Adviser
  Average Base Salary YOY Increase Average Base Salary YOY Increase Average Base Salary YOY Increase
 
NSW/ACT $101,00 N/A $134,000 4.5% $184,000 7.1%
VIC/ TAS $97,000 N/A $123,000 2.4% $162,000 4.9%
QLD $85,000 N/A $118,000 11.0% $145,000 9.0%
SA $97,000  N/A $118,000 5.1% $137,000 0.7%
WA $93,000 N/A $130,000 10.8% $155,000 0.0%
National Average – Metro $97,000 N/A $128,000 5.5% $162,000 4.9%
National Average – Regional $86,000 N/A $121,000 5.0% $153,000 3.3%
National Average $94,000 N/A $125,000 6.0% $157,000 4.0%

Source: The Principals Community Business Insights 2023; excludes super. *First year tracking.

The data found salary costs comprised an average of 50 per cent of advice practice revenue, making it the largest cost to advice businesses.

The average adviser in the community is looking after 98 client groups, and generating $702,000 of ongoing revenue and $49,000 of new business.

“Compare that to what the adviser is actually generating,” Costas says.

“Everyone’s data is going to be a little different, but it’s giving them a basis to be able to compare and relate to.”

Costas notes the work and productivity of support staff as well as technological and regulatory costs required to facilitate the advice process should be factored into the revenue generated by an adviser.

“And the average business is sitting around 29 to 30 per cent EBIT [earnings before interest and taxes], that’s the real data,” Costas says.

FY23 support staff salary averages

Location Administration Client Services Officer Paraplanner
Average Base Salary YOY Increase Average Base Salary YOY Increase Average Base Salary YOY Increase
NSW/ACT $77,000 2.6% $82,000 6.1% $91,000 4.4%
VIC/ TAS $65,000 0.0% $76,000 5.3% $86,000 1.2%
QLD $61,000 1.6% $70,000 8.6% $78,000 1.3%
SA $60,000 1.7% $68,000 7.4% $88,000 10.2%
WA $65,000 6.2% $76,000 6.6% $87,000 1.1%
National Average – Metro $70,000 4.3% $78,000 6.4% $88,000 2.3%
National Average – Regional $58,000 3.4% $67,000 4.5% $79,000 5.1%
National Average $65,000 3.0% $74,000 6.0% $85,000 4.0%

Source: The Principals Community Business Insights 2023; excludes super.

The group’s research found that 32 per cent of practices will be focussing on recruitment of customer services officers, along with administration and paraplanning roles, over the next 12 months.

FY23 average bonus per role

Role Per cent of businesses paying a bonus by role Average Bonus
Administration 25% $2,000
Client services officer 23% $2,000
Paraplanner 29% $3,000
Associate adviser 23% $7,000
Adviser 32% $12,000
Senior adviser 27% $24,000

Source: The Principals Community Business Insights 2023

But Costas says another important factor is that isn’t always about money, with culture, values and standards of the business being important factors employees consider.

“There’s businesses and there’s businesses,” Costas says.

“If someone is waving a cheque and they don’t have the right culture, the right systems, processes, standards and behaviours within a practice, the cheque on its own only lasts so long.”

Costas adds some businesses are providing alternative incentives, whether it’s additional leave, or non-monetary benefits like flexibility, or equity stakes.

“Staff equity schemes have certainly been on the radar and incentivising people to get involved in the business,” Costas says.

“Interestingly, not all staff that are offered the opportunity take it, for a million and one different reasons.”