The Investment Trends 2024 Adviser Business Model Report, also found that advisers have reduced their average client book from 120 clients in 2023 to 99 in 2024, but 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.
Irene Guiamatsia, head of research at Investment Trends, said the changes advisers have made in their practice operations are a clear signal of a deliberate shift towards quality over quantity in client relationships.
“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 per cent 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,” Guiamatsia said.
The report also uncovers significant gender differences in how advisers manage their practices. Female advisers are 25 per cent 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 per cent more likely to describe their client focus based on their wealth bracket and focus on affluent clients.
Additionally, 65 per cent of female advisers feel less unsettled by regulatory changes compared to 45 per cent 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.”
