Optimistic financial planners anticipate further growth: Macquarie Practice Consulting

Positive profit expectations for 2014 within the financial planning community: Macquarie

Positive profit expectations for 2014 within the financial planning community: Macquarie

The Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey has revealed further optimism within the financial planning community, with respondents anticipating an increase in profit in 2014.

Eight in ten (83 per cent) advisers anticipate increased profits in the next 12 months, up from 74 per cent in 2012. Practices that offer financial planning only or financial planning and accounting are the most positive, with a larger proportion expecting at least a 20 per cent increase in profit in the next financial year (32 per cent and 39 per cent respectively). Younger practices are also confident, with half of firms under three years old believing they will do the same.

“This year’s survey has shown steady growth in revenue and gross profit in advice practices, which is great news for the financial planning industry,” said Fiona Mackenzie, Head of Macquarie Practice Consulting.

The results showed that since the last survey, there was a 15 per cent increase in average revenue and an increase in average operating profit of 45 per cent over the same period. In addition to these top line measurements showing improvement, direct expenses have remained fairly steady and the average revenue per adviser has increased.

“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.”

While revenue and profits are up, there has been a reduction in client numbers per adviser (153 clients per adviser, compared to 185 in 2012). Additionally, advisers have a higher proportion of active clients, up at 77 per cent in comparison to 69 per cent in 2012. Macquarie Banking and Financial Services Group 2

“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.” said Ms Mackenzie

“Looking at the evidence of profit and revenue growth, this could be a good sign that many are having success with this strategy.”

The full report will be available in early 2014.

About the Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey:

Data was collected from 226 financial planning practices in October 2013 with the majority of respondents (82 per cent) being practice principals. The survey covers a wide range of topical areas for Australian financial planning firms, including business structure, financial management, general practice and confidence. Measures capturing profit and revenue were calculated based on the 2012/2013 financial year results for the participating firms. The previous survey was released in May 2012 and based on the 2010/2011 financial year.

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