A jump in the number of Australians seeking financial advice during COVID-19 was largely attributed to clients seeking advice on financial support packages, yet the trend has persisted as the country recovers from the pandemic.
According to Adviser Ratings, around 15 per cent of an adviser’s client base was made up of one-off clients before 2020. But by 2021, almost one in four clients would only see their adviser once.
The firm partially credited these findings to Record of Advice requirements for early access to super. However, episodic advice as a proportion of the typical client book has fallen just 1 per cent as we go into the new year.
Following years of decline, the average number of clients per adviser surged in 2022 on the back of the great adviser exodus.
Adviser Ratings said this has propelled practices to cycle through — or orphan — clients who don’t match their goals.
“In some cases, these clients can use their super fund’s advice; in other cases, they end up joining the growing army of Australians with unmet financial advice needs,” the firm said.
Further, the firm explained that the shedding of unprofitable clients may be contributing to the continuation of the one-off advice trend after its initial spike.
The rationalisation of client books has allowed advisers to take on clients in a more limited capacity, additionally making room for more one-off clients with the intention of an ongoing relationship.
“While advisers acknowledge there’s a significant need for dedicated scoped advice offerings, few offer the model exclusively. The same compliance obligations and the opportunity cost of serving more recurring clients mean one-off clients often doesn’t fit with practices’ broader growth objectives,” Adviser Ratings concluded in its report.
Earlier this year, Adviser Ratings revealed that as many as 100,000 consumers had either stopped seeing an adviser or were orphaned as affordability concerns have continued to dominate.
