Advisers struggle to balance affordability and profitability: CFS

Yasmine Raso

Senior Journalist, Financial Newswire

20 November 2024

New research conducted on behalf of Colonial First State (CFS) has identified several key “hurdles” to financial advisers increasing the client list, including managing the precarious balance between advice affordability and practice profitability.

The CFS Advice Practice Profitability report, informed by the research collected by Empower Business Advisory, confirmed that financial advisers were looking to grow revenue per client (54 per cent) and expand their client base (50 per cent).

According to the research, advisers intend to increase their capacity to serve 152 clients; based on the average of 110 clients currently managed by financial advisers, this uplift could see approximately 650,000 more Australians receive ongoing financial advice and would raise the total number of advised Australians to 2.4 million.

“We explored advisers’ strategic priorities for the next three years, and found increasing capacity to serve more clients annually is one of the industry’s top priorities,” Recep III Peker, Founder and Managing Director of Empowered Business Advisory and author of the report, said.

“As part of this advisers, advisers are aiming to simplify their operations and reduce the cost of servicing clients, while seeking to increase their revenue per client as an outcome of delivering greater value.

“Taken together, this shows clear intent to boost advice quality and business profitability while simultaneously getting advice to more Australians.”

The report also found that two-thirds of advisers surveyed are not hampered by the overwhelming demand for and limited supply of advice, but rather “their ability to supply it profitably while keeping advice affordable”. Other “hurdles” noted by advisers in the report included inefficiencies in providing advice, ongoing servicing requirements and capacity constraints.

“The CFS Advice Practice Profitability Report shows that, on average, advisers who use CFS FirstChoice as their primary platform serve 24% more ongoing clients compared to their peers,” CFS Group Executive Distribution, Bryce Quirk, said.

“The report also confirms preliminary research that found advisers are experiencing a meaningful reduction in client onboarding time when using CFS FirstChoice onboarding powered by Elemnta.

“As a result, we look forward to continuing to work with advisers, reviewing their operational set up and supporting them in identifying and implementing efficiency opportunities.

“Our new FirstChoice Business Optimisation service is dedicated to helping advisers implement the Elemnta onboarding tool and integrate managed accounts to unlock efficiencies.”