Domestic advice gap remains, despite strong global revenue growth

The report, released by Dimensional Funds Adviser, includes data provided by the 868 firms worldwide, including 83 across Australia and New Zealand, representing nearly $995 billion in total assets.

According to the report, average assets under management globally sit at $354,706,000, while average assets under advice sit at $21,969,810, bringing the average total billable assets to $376,676,218, with a median growth rate globally of 15 per cent.

A clear trend evident in the report is strong revenue growth, particularly among high performing advisers.

Dimensional reports that revenue growth during the period the survey was conducted (2024) was significantly stronger than in 2023, with the median revenue growth rate sitting at roughly 5 percentage points.

The report stated that just like in prior years, in 2024, the median revenue growth rate was higher for high performing firms (15.3 per cent), as compared to other firms (9.7 per cent).

However, according to Dimensional, this increasing revenue is not reflective of a growing demographic cross-section of people internationally seeking advice, instead the advice gap is continually growing.

Gen X clients above the age of 50 and Baby Boomers account for the overwhelming majority of billable assets, averaging 82.5 per cent. Within this, clients aged 61–70 make up the largest share at 33.7 per cent. The 41–50 age group holds 11.1 per cent, and clients under 40 represent just 4.7 per cent - the smallest share.

Going forward, Dimensional highlighted firm capacity restraints being the top growth challenge internationally. Domestically, Australian firms are already dealing with the continually falling number of advisers, coupled with a lack of fresh new candidates entering the profession.

This adviser shortage means that Australia’s capacity issues are even more exacerbated than they are internationally. Speaking at the Australian Wealth Management Summit, Praemium chief strategy officer Denis Orrock stated that “We’re servicing maybe 30 or 40 per cent less customers per adviser in Australia than we are in the UK.”

Australia’s advice gap and capacity constraints are so pronounced that even in high-growth segments, such as high-net-worth clients, there aren’t enough advisers to meet demand.

“We actually think, just to service the high-net-worth market alone, Australia is about 8,000 advisers short,” Orrock said.