According to Adviser Ratings, a recent survey indicated that 41 per cent of advice businesses are planning on keeping roughly the same number of advisers, up from 37 per cent in 2023.
Additionally, 39 per cent were only looking to increase organically, a slight drop from 40 per cent the previous year, while 15 per cent were looking to increase both organically and through acquisition, down from 17 per cent.
“This shift suggests that firms are becoming more cautious and possibly more strategic in their expansion plans, potentially in response to market conditions or other external factors,” Adviser Ratings said.
The firm suggested that technology and artificial intelligence are influencing how companies are making strategic decisions about their adviser growth, utilising them to improve efficiency within businesses and impacting if and how they expand their adviser teams.
Furthermore, businesses have begun incorporating advanced technological tools and AI into their planning processes, providing enhanced data analytics capabilities, allowing them to better predict client needs and optimise resource allocation.
“This trend could be reflective of broader economic conditions or industry-specific challenges. The stability in acquisition plans suggests that mergers and acquisitions are not the primary growth strategy for most firms, potentially due to the complexities and costs associated with such actions,” the firm said.
Acquisition, revenue, and adviser growth
Adviser Ratings noted a strong correlation between a business’ recent performance and its desire to expand its adviser numbers.
According to the data, 63 per cent of businesses that saw an increase in revenue over the past 12 months were planning on increasing their number of advisers, and 37 per cent indicated they would maintain their current number.
Additionally, of those whose revenue remained relatively flat, 41 per cent planned to grow their adviser numbers and 59 per cent said they would maintain their current level.
Only businesses that had seen a decrease in revenue were planning to reduce the number of advisers they had, with 15 per cent indicating plans to do so. Of the remaining firms, 50 per cent said they would maintain their current level and 35 per cent said they would increase, despite their decrease in revenue.
The firm also noted a similar pattern emerging in relation to client growth, with those that had successfully acquired more clients in the last 12 months being more likely to increase their number of advisers.
“This trend highlights the importance of client growth as a driver for expanding advisory teams, suggesting that firms with growing client bases feel confident in their ability to support and benefit from additional advisers,” the firm said.
