Practices making more money than ever despite numbers falling

Much conversation in advice media, including this publication , is centred around the rising costs of running a practice, as well as the declining numbers of advisers available to work in them.  

Despite this, Adviser Ratings latest entry into the ‘Australian Advice Landscape’ reports has found a “smaller profession decisively in profit”. 

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Specifically, average revenue across advice practices is up 40 per cent to $674,000 since 2023, with margins hitting a record 23.3 per cent, despite adviser numbers still sitting 46 per cent below the pre-Royal Commission 2018 peak.  

The share of practices earning more than $1.5 million in revenue has risen to 28 per cent, while those turning no profit has nearly halved from 17.7 per cent to just 9.4 per cent.  

In what Adviser Ratings has called the “Great Compression”, this trend has been driven by one simple trend- there are fewer advisers charging higher fees. The 15,084 advisers as of 1 January 2026 have become a precious commodity, and the valuable guidance and certainty they provide to clients through personal relationships is something clients want to pay for.  

Right now, the median ongoing fee is $4,837, up 93 per cent since 2019.  

“The result is a market of rarer, more valuable advice relationships, with around 1.92 million Australians now advised and median funds under advice of $755,000 per client.” 

A largely positive take, others may argue that these rising costs are due to the rising costs of running a practice, with expenses such as the ballooning CSLR being leaving advisers with no choice but to pass costs off onto the client.  

What this too exacerbates is the already large advice gap, pricing many Australians out of advice when they could benefit. If CoreData findings presented by founder Andrew Inwood are to be believed, this continued in the number of advisers could leave 1.7 million Australians approaching retirement without access to the service.  

Where client money sits is also shifting. The march of managed accounts seems to be stomping along healthily, with $280 billion of funds under these arrangements. Off-the-shelf, separately managed accounts (SMAs) are used by 51 per cent of practices, custom SMAs by another 31 per cent and managed discretionary accounts by 26 per cent.  

Advice also drove a net $10.5 billion out of industry and public-sector superfunds and onto platforms in the most recent quarter, with 63 per cent of advisers saying they are likely to move clients balances out.  

Alongside this shift is also the rising presence of artificial intelligence (AI). The report found AI adoption has rapidly shifted from an emerging trend to a mainstream business tool, with usage rising from 45 per cent to 69 per cent over the past two years. 

Paid or enterprise AI access increased from 36 per cent to 60 per cent during the same period, while nine in 10 practices now use the technology for meeting notes and file documentation. 

However, the report warned governance and compliance frameworks have struggled to keep pace, with many firms still navigating their obligations under ASIC’s INFO 285, CPS 230 and the Privacy Act. 

“The advisers who stayed through reform are now scaling, and it shows in the numbers. Revenue is up 40%, margins are at a record, and almost nobody is planning to leave – exit intent is the lowest we’ve recorded since FASEA,” said Angus Woods, managing director of Adviser Ratings.  

“This is a profession that has moved from survival to confidence,” He added: “But the same forces that lifted profitability – fewer advisers, higher fees, a record handover of household wealth – are widening the advice gap for ordinary Australians and putting the squeeze on incumbent super funds. 

“Technology, and AI in particular, is now the main lever practices are pulling to close that gap. The opportunity, and the regulatory responsibility, sit side by side.