Why optimism is returning to advice

Financial advice firms are setting themselves up for growth with the help of new technology and improved processes, including a focus on ensuring more support personnel is available to clients, a new study has revealed.

The study conducted by asset manager Dimensional Fund Advisors and covering 75 local advice firms has painted a more optimistic picture of the advice industry.

The firm found that while managing compliance and regulatory changes remains a major operational challenger for local firms, the focus of higher-performing firms is principally on implementing workflow processes and selecting and maintaining technology.

“The picture we get from firms we survey with is that years of advisers working on the business, as opposed to in the business, is finally starting to bear fruit,” says Dimensional Australia client group co-head Nathan Krieger.

“There’s definitely a greater sense of optimism now than there was a few years ago”.

According to the study’s findings, those firms deemed higher performing were managing to provide a greater number of services to more clients, which in turn translated to average yearly growth in revenue of 19 per cent.

Mr Krieger explained that this success is attributable to improved efficiencies and technology, including a focus on growing client service support personnel.

“That’s allowing high-performing firms to service more clients per advisor without losing quality,” he said.

Taking a closer look at the performance of individual advisers, Dimensional Australia found that advisers at high-performing firms now service some 173 households, as opposed to 122 households at other local firms.

The average revenue per senior adviser was also said to be significantly higher at the top firms at $1.1 million versus $750,000 at other firms in Australia and New Zealand.