Top advisers have $260,000 a year edge

There exists a $260,000 a year gap between the revenue being generated by senior advisers in high-performing financial advice firms and those working in firms deemed average, according to new analysis released by Dimensional Fund Advisors.

The analysis claims that the average revenue per senior adviser in a top firm is $1.1 million versus $750,000 in a lesser firm.

The Dimensional analysis deems high-performing advice firms to be those which have better implemented workflow processes and which adopted and maintained a more advanced approach to technology.

The Dimensional research suggested that high-performing advice firms enjoyed 19% year on year growth in revenue compared to just 14% for other firms.

Discussing the research findings, Dimensional Australia client group co-head, Nathan Krieger said that compliance and regulatory changes remained the major operational challenge for local advice firms, and much more so than for their global counterparts.

“The picture we get from firms we survey with is that years of advisers working on the business, as opposed to in the business, is finally starting to bear fruit,” Krieger said. “There’s definitely a greater sense of optimism now than there was a few years ago.”

In terms of distinctions between global firms and those in Australia and NZ, the survey found the local industry was less reliant on merger-and-acquisitions as a source of growth and also less likely to pay staff compensation through performance bonuses.

It noted that the industry locally had been undergoing significant change in recent years under the pressure of regulatory and compliance requirements. A new regulatory regime for financial advice came into force in New Zealand in 2021, while Australia has had several waves of regulatory change dating back to the Future of Financial Advice reforms a decade ago.

“After those changes and subsequent reforms in the wake of the Hayne Royal Commission that required advisers to undergo further training and certification, there has been a major exodus from the industry. Banks exited financial advice and many existing advisers quit the industry altogether.”

“In the meantime, however, remaining firms have made substantial investments in productivity-enhancing technology, made a priority of workflow process improvements and sought to enhance the overall client experience. With the prospect of a simplified regulatory and compliance regime after the Levy inquiry, that holds out the prospect of a new wave of growth in the years ahead.”