Self-licensed advisers more likely to have increased profits

Mike Taylor

Managing Editor and Publisher

7 September 2023

Self-licensed financial advisers are more likely than their peers to have seen profit margins increase over the past 12 months, according to the latest research from Investment Trends.

According to the research, 38% of the advisers surveyed say they have been experiencing increases in business profitability and that this was more so for those who are self-licensed.

“Self-licensed advisers – a segment that continues to grow – are even more likely to have seen profit margins increase (41% reported an increase in practice revenue in 2023, compared to 39% in 2022),” the research analysis said.

The research, contained within the Investment Trends 2023 Adviser Business Model Report, also pointed to the fact that as the cost of producing advice had increased so, too, had fees.

“While the cost to produce advice has risen by 9% during the period ($3,580, up from $3,280 in 2022), advisers on average have increased their fees by 25% for upfront fees ($4,000) and 18% for ongoing relationship fees ($4,700),” the analysis said.

The research has also point to advisers believing that while the Quality of Advice Review (QAR) recommendations will increase the accessibility and affordability of advice, they are less certain about it improving the overall quality.

Commenting on the research, Investment Trends Head of Research, Irene Guiamatsia said advisers, and the industry as a whole, had worked hard to address issues around conflict and it was natural to seem some hesitancy around what some might construe as a return to old ways.

“The sector faces the important challenge to chart a cohesive path to a future state where different advice delivery mechanisms that can cater to different client groups and different life stages co- exist harmoniously – ultimately supporting a growing cohort of Australians with preparing for retirement”.