Key findings of the Investment Trends 2014 Planner Business Model Report

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  • Planners’ businesses continue to improve
  • But many are facing challenges relating to demonstrating value to clients and improving business efficiency
  • Aligned dealer group channels are at risk and we may be entering a period of increased upheaval

Planners’ businesses have continued to improve from last year

Recep Peker

Recep Peker

Improvements across a range of key planner business metrics have given rise to increased optimism among financial planners, according to a new report from leading wealth researcher Investment Trends.

In its eleventh year, the May 2014 Planner Business Model Report is an in-depth study of Australian financial planners and their business processes. The study is based on a survey of 1,038 financial planners concluded in May 2014. This year’s study highlights a number of interesting trends:

“Our most recent study sees the average number of active clients serviced annually by planners edging upward, from a low of 141 in 2012 to 147 this year,” said Investment Trends Senior Analyst Recep Peker. “Rising markets and recovering client numbers are lifting assets under advice and hence revenue.”

“Planners have maintained a tight control over costs, with the average cost of delivering full advice falling from $2,400 in 2013 to $2,250 this year,” said Peker. “This has certainly contributed to 72% of planners citing improved practice profitability this year, up from 59% saying so in the previous study.”

Demonstrating value to clients and improving business efficiency are larger issues in the current environment, ahead of the regulatory burden and uncertainty from FoFA

Despite improving business conditions, almost all planners (98%) say they are facing challenges in their business with the typical planner highlighting 3.9 key business challenges.

While 73% of planners say they are facing regulatory-related challenges such as “compliance burden”, 81% are facing business challenges relating to demonstrating value and improving business efficiency.

“Although the regulatory burden posed by FoFA remains a major challenge for planners, demonstrating value to clients and improving business efficiency is now a greater priority,” explained Peker. “These challenges relate to new client acquisition, building efficiencies into their processes, providing affordable advice to lower balance clients and making clients aware of their value proposition.”

Aligned dealer group channels are at risk and we may be entering a period of increased upheaval

There is a 55% increase in the proportion of planners intending to switch dealer groups in the next 12 months (10%, up from 6% in the last study).

“We began measuring dealer group satisfaction for the first time in this years’ study, and found that planners working in majority independent dealer groups had higher levels of overall satisfaction compared to those working in bank or institutionally aligned dealer groups,” said Peker.

“As expected, dealer groups that have more satisfied planners typically have a smaller proportion planning on leaving,” said Peker. “To improve planners’ satisfaction, a key area for dealer groups to focus on is enhancing the effectiveness of the advice and review process.”

“By helping planners provide advice more efficiently and demonstrate value better, dealer groups can boost satisfaction and increase loyalty.

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