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2023 Adviser Business Model Report

38% of advisers report higher practice profitability in the last 12 months

  • Advisers are on average servicing larger client books
  • For more profitable advisers, success is multifaceted but in the main driven by higher fees and cost discipline
  • Most advisers believe QAR will likely deliver Accessibility and Affordability, but are more circumspect about the Quality of client outcomes

6th September 2023, Sydney – Leading financial services industry research firm Investment Trends releases its 20th edition of the 2023 Adviser Business Model Report.

Providing an in-depth analysis of the rapidly changing financial advice provision and how advisers operate their practices and manage their relationships with licensee networks and service providers, this year’s edition highlights a continued positive trend for advice practice profitability.

The number of financial advisers has continued to trend downwards (from 16,700 in 2022 to close to 15,700 as at May 2023 according to the ASIC Financial Advice Register). Correspondingly, the average number of active clients per adviser has risen to 120, up from 113 a year ago (‘active’ refers to those clients who have seen their adviser at least once in the preceding 12-month period).

Compared to a year ago, nearly two in five (38%) advisers report increases in business profitability. Self-licensed advisers – a segment that continues to grow – are even more likely to have seen profit margins increase (41% reported an increase in practice revenue in 2023, compared to 39% in 2022).
“It’s encouraging to see the positive business outcomes advisers are experiencing. As things stand, new client acquisition is, on an average basis, no longer loss-leading and those advisers who see growing profit margins have the largest client books (143 clients vs 120 industry average),” said Dr Irene Guiamatsia, Head of Research at Investment Trends.
More profitable advisers particularly call out efficient systems, admin support, and most notably, increased fees and cost discipline as factors that drove growing profit margins in the last 12 months. While the cost to produce advice has risen by 9% during the period ($3,580, up from $3,280 in 2022), advisers on average have increased their fees by 25% for upfront fees ($4,000) and 18% for ongoing relationship fees ($4,700).

Shifting to perspectives on the Quality of Advice review, specifically on Accessibility, Affordability and Quality – advisers emphatically agree the first two outcomes would be met, but express reservations about the latter. In particular, the majority of advisers appear to need further convincing on the ability for super funds to provide advice (53% cite, see chart).
“Advisers – and the industry as a whole – have worked very hard to address issues around conflict, and it is natural to see some hesitancy around what some may construe as a return to old ways,” added Guiamatsia.

“The sector faces the important challenge to chart a cohesive path to a future state where different advice delivery mechanisms that can cater to different client groups and different life stages co-exist harmoniously – ultimately supporting a growing cohort of Australians with preparing for retirement”.


About the report

The Investment Trends 2023 Adviser Business Model Report provides a detailed analysis of the rapidly changing business of providing financial advice, how advisers can be supported to meet the growing demand for advice from Australians and takes a deep dive into their relationship with dealer groups and service providers. This report is based on a survey of 632 financial advisers conducted from April to May 2023.

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