Over the past two years, more businesses are adding fewer support staff to their payroll. Instead, they are turning to technology-based solutions, such as AI, for better efficiency and lower cost support.
This trajectory is according to the Adviser Ratings ‘2024 Australian Finance Advice Landscape’ report which displayed the practice-to-staff ratio from 2022-24.
The practice-to-staff ratio of administrative staff has decreased from 1.82 support staff per practice in the 2022 survey to 1.66 in 2024.
Paraplanning has also seen a slight reduction of 0.72 staff per practice in the 2022 survey to 0.67, with outsourced paraplanning reducing from 0.63 staff per practice to 0.52.
Comparatively, the average financial adviser per practice increased from 2.19 in the 2022 survey to 2.54 this year.
Furthermore, Investment Trends’ ‘2024 Adviser Technology Needs’ report confirms that practices are already adopting AI to improve efficiency with 37 per cent of advisers already using AI technology and 43 per cent expressing interest.
The practices that have adopted AI primarily use it for “editing” (42 per cent) – which Investment Trends describes as pertaining to formatting client communications/emails, facilitating the creation of reports/presentations and summarising lengthy documents – and customer service (33 per cent).
Adviser Ratings managing director Angus Woods tells Professional Planner that businesses are suddenly able to reduce costs that they built up during the Covid-19 pandemic and therefore “around 50 per cent” of practices have started to use AI.
This is “a psychological shift for businesses”, he says. Those who have always relied on support staff are now having to rapidly adapt to the change to technology-based solutions instead.
Woods says advisers are not marketers or writers and as a result are experimenting with Microsoft Copilot and Chat GPT. He believes that businesses will have different ways of adapting to the new technology.
“It will be mixed – when you’re running a business, it’s about finding the time,” Woods says.
“Those who are very agile like to spend time on growth. Some are forced to go down the AI path.”
For those who utilise AI, Woods says care is required for how they engage with it and whether it has sufficient utility for the business and its clients.
“Businesses can waste a lot of time trying to get to grips with AI just because people say you should be using it,” Woods says.
Although the report suggests that businesses are eager to convert to technology-based solutions, it is more complicated for some. Andrea Jenkins, principal of Jenbury Financial, says the business wants to “keep a personal touch’” and not lose the “human element”.
Jenbury Financial was founded in 2012 and is a values-based company with under 10 employees.
Despite the desire to avoid switching to AI products, Jenkins says the business has benefited from certain recent technology, and it has drastically improved efficiency.
Jenkins says using an AI transcribing service has helped reduce a three-hour transcription time from three hours to 30 minutes.
She adds that it is cheaper than hiring administrative staff and that the usage of AI products removes “the possibility of human error”.
Although Jenkins does not intend to fully switch to technology-based solutions, she recognises the benefits of outsourcing in certain areas, such as administration, and believes that it will happen in many businesses. For smaller businesses such as Jenbury Financial, it may not be right now, but outsourcing seems inevitable in the future.
Nexia Perth director Fran Hughes confirms that the business has already taken steps to decrease the number of support staff added to their payroll.
“We have structured client facing roles to be in-house, whilst back-office solutions to be outsourced,” Hughes says.
Nexia already outsourcing all back-office solutions may be an indication that it is only a matter of time before other businesses follow suit.
The intention to streamline is not always the cause of businesses turning to technology-based solutions for support, as the Adviser Ratings report suggests. Neither Jenbury Financial nor Eureka Whittaker Macnaught/Blue Harbour are planning to reduce their numbers.
Jenkins emphasised that Jenbury Financial “is already lean” and that they do not want to streamline further.
Eureka Whittaker Macnaught, which merged with Blue Harbour Financial Partners in April, naturally led to an expansion of staffing numbers.
The firm’s CEO Greg Cook says he “was not aware that the hiring of support staff had been going down” and that his focus is on ensuring the smooth transition of the merger into the new fiscal year.
Cook also confirmed that, due to the merger, they will continue to hire support staff rather than turning to technology-based solutions for the moment. This does not mean that they will not do so in the future.
