Irene Guiamatsia
Investment Trends, a leading financial services research firm, has released its 2024 Adviser Business Model Report, offering crucial insights into the evolving landscape of financial advisory practices in Australia. The report highlights significant trends, market opportunities, and the strategic shifts advisers are making to navigate a dynamic environment.
The report shows financial advisers have experienced substantial client attrition due to recent fee increases, reducing the average client book from 120 clients in 2023 to 99 in 2024. Despite this, the quality of client relationships has improved, with higher inflows and total funds under advice. The average level of new client inflows has also risen to $6.6 million from $6.0 million in 2023, indicating a healthier, more engaged client base.
“The changes advisers have made in their practice operations are a clear signal of a deliberate shift towards quality over quantity in client relationships,” said Irene Guiamatsia, Head of Research at Investment Trends. “Advisers have however not lost sight of – and in fact are doubling down on – the imperative for enhanced efficiency as a means to deepen client engagement and create a more personalised client experience.”
The report also highlights a significant increase in practice profitability, with a small group of advisers reporting profit margins exceeding 40% for FY23. These best-in-class advisers attribute their success to stringent cost discipline and strategic fee increases. This trend is further supported by the continuous rise in funds under advice, now averaging $69 million, up from $63 million in 2023.
“Fee increases have provided a strong foundation for the rise in practice profitability which we’ve seen across the sector for the second year running; But we find that practices that vastly lifted their bottom line were those with a near-ascetic approach to cost management,” noted Guiamatsia.
The report also uncovers significant gender differences in how advisers manage their practices. Female advisers are 25% more likely to adopt a life stage mindset when advising clients, focusing on pre-retirees and retirees. This contrasts with their male counterparts, who are 30% more likely to describe their client focus based on their wealth bracket and focus on affluent clients.
Additionally, 65% of female advisers feel less unsettled by regulatory changes compared to 45% of male advisers, indicating a resilience that may offer a competitive edge in the evolving regulatory environment.
“Female advisers’ approach to client relationships and their resilience to regulatory shifts present unique opportunities for differentiation,” Guiamatsia added. “These strengths can be leveraged by advice practices to better meet the diverse advice needs of Australian consumers.”
The 2024 Adviser Business Model Report provides deep insights into business models, operating models, and client engagement trends for advice practices. By understanding and adapting to these key trends, licensees can better position themselves to capitalise on emerging opportunities and future-proof their businesses.
About the report
The Investment Trends 2024 Adviser Business Model Report provides a detailed analysis of key trends and opportunities within the financial advice sector. Based on a quantitative online survey of financial advisers conducted by Investment Trends between May 2024 and June 2024. Total number of responses after data cleaning and validation: n=1,732 financial advisers.
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