Financial advice businesses are bullish about future growth prospects despite ongoing challenges as a result of compliance requirements, legislative change and a shortage of the right people.
In Iress’ inaugural Advice Efficiency Survey, more than 7 out of 10 businesses surveyed (72%) forecast growth over the next three years. Advice businesses are nearly unanimous that their operating models need to change with just 6% believing they will be operating in the same way in three years’ time.
Iress commissioned practice development consultancy Business Health to conduct the research with 113 Australian advice practices. The research also highlights the characteristics of the most profitable financial advice businesses.
Almost two-thirds (60%) say compliance and legislative requirements will be the greatest impediment to growth alongside finding good people and advisers (32%).
The research also found that many advice practices want to focus on creating more scale in their business in order to achieve growth, however 57% are frustrated with manually entering client data into two or three different technology platforms.
Iress CEO, Andrew Walsh, said: “The survey results clearly show that advice businesses are optimistic about the future. Despite a narrow focus on registered adviser numbers as the sole measure of the health of the industry, advice businesses remain confident of future growth and are seeking to change their practices to scale.
“The research found that successful advice firms are achieving scale by optimising their processes and harnessing technology to unlock potential and work smarter. This is enabling them to provide advice faster, which equals more opportunity to generate revenue.
“Newer advice practices are also reaping the benefits of their technology investment, including higher adoption of tools like portals to engage with clients at scale and producing advice documents more quickly. These newer practices are also focused on training their people to get the most out of technology.
“Australian advice practices are going through an unprecedented period of change driven by regulation, demographics, markets and competitors, and technology can be an important ally to help practice owners adapt and thrive, now and in the future.”
A full copy of the survey results can be found here.
Other key highlights from the research: Characteristics of high performing Australian advice practices