Financial Advisory Expansion: Balancing Growth and Regulatory Challenges

3

The findings in the Advice Practice Profitability Report suggest that advisors are planning to grow their client portfolios, increasing average client numbers from 110 to 152. With 15,500 financial advisers each potentially onboarding nearly 42 new clients, the projections see the total number of Australians receiving ongoing financial advice climb to approximately 2.4 million.

However, expanding the client base comes with its own set of challenges. Two-thirds of advisers acknowledge hurdles in scaling their practices, with inefficiencies in service provision and capacity constraints being primary concerns. Additionally, ongoing regulatory servicing requirements put extra pressure on advisers looking to extend their reach.

To tackle these challenges, many advisers plan to streamline their operations and cut costs associated with client servicing, while simultaneously focusing on boosting revenue from each client. Over the next three years, 54% of advisers aim to enhance revenue per client, with 50% proposing to increase their annual client load.

Recep III Peker, founder of Empower Business Advisory and author of the report, reflected on these findings in a recent media announcement. He noted, “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.”

Navigating Capacity Constraints

As government conversations around financial advice reforms continue, there's ambiguity over whether practices will use this additional capacity to lower client fees or increase client intake—if servicing costs drop. A report by Professional Planner disclosed that administration and compliance overheads constitute 56.5% of total advisory costs.

The demand for financial advice is indeed rising, despite its currently high costs, reflecting a keen consumer interest. An October survey by the Financial Advice Association indicated that nine out of ten clients felt the advantages of financial advice outweighed its financial implications.

A recent Professional Planner roundtable shed light on the ethical obligations of financial advisers to improve productivity and cater to growing demand. Discussions pointed out a noticeable reservation among some advisers; they may lack an inherent motivation to scale their client base if their current earnings remain stable with fewer clients.

This mindset could counteract the goals of the Delivering Better Financial Outcomes initiative, designed to reduce bureaucratic red tape and empower advisers to better accommodate their clients, ultimately bridging the existing advice gap.

Published:Wednesday, 20th Nov 2024
Source: Paige Estritori

Share this news item:

Finance News

Clear

Commonwealth Bank Challenges RBA's Card Fee Reform

12 Sep 2025: Paige Estritori

Australia’s leading financial institution, the Commonwealth Bank of Australia, has openly criticised the Reserve Bank of Australia (RBA) for its calculations related to a proposed reduction in debit and credit card transaction fees. The RBA suggested that the reform would save Australian businesses $1.2 billion annually and benefit the majority of companies, a claim that the Commonwealth Bank strongly disputes. - read more

Ongoing Consumer Spending Surge Threatens Future Interest Rate Cuts

11 Sep 2025: Paige Estritori

Amid a period of robust consumer spending, Australia's mortgage holders may face limited future interest-rate cuts. The Commonwealth Bank has observed Australians increasing their spending over the last six months, spurred by rising incomes, a robust job market, and previously lowered interest rates. - read more

CSLR Funding Concerns as Special Levy Decision Remains Pending

11 Sep 2025: Paige Estritori

The Compensation Scheme of Last Resort (CSLR) recently highlighted potential delays in compensation payments due to insufficient special levy funds. In July, the CSLR's proposed FY2025–26 levy plan allocated $67.29 million for financial advisers, surpassing the $20 million limit set for the subsector. This shortfall of $47.29 million prompted the Treasury to initiate a consultation in August to determine funding solutions for the excess levy. - read more

Retiree Surge to Drive Demand for Financial Advisers in Australia

10 Sep 2025: Paige Estritori

A recent study by Adviser Ratings, as outlined in the 2025 Australian Financial Advice Landscape Report, indicates that the number of financial advisers in Australia will need to increase significantly. From the present count of 15,500 advisers, the industry is expected to require more than 50,000 over the next thirty years to cater to a growing retiree population. - read more

FAAA Advocates Balance in Non-Compete Reform for the Financial Sector

10 Sep 2025: Paige Estritori

The Australian government is examining potential reforms to non-compete clauses in employment contracts, driven by concerns that current laws may impede workers from advancing their careers and, in turn, hinder economic growth. In this context, the Financial Advice Association Australia (FAAA) has raised concerns about these reforms, urging that the proposed changes should balance the interests of both employees and employers. - read more

Aussie Incomes Lag in OECD Amid Productivity Concerns

09 Sep 2025: Paige Estritori

Australia has recorded a sluggish rise in real per capita household disposable income over the past decade, making it the slowest growth among major English-speaking countries. According to OECD data, from Q1 2015 to Q1 2025, Australian incomes only increased by 3.5%, starkly contrasted with Canada's 8.9%, the United States' 20.6%, and the United Kingdom's 8%. The OECD average during this period was 18.7%, further highlighting Australia's economic challenges. - read more

Mayfair 101 Director Restricted from Financial Promotions for 15 More Years

09 Sep 2025: Paige Estritori

James Mawhinney, a key figure at Mayfair 101 Group, has been issued a 15-year extension on his restraint from engaging in financial promotions or fund-raising, after the Federal Court finalised orders against him. This decision blocks Mawhinney from soliciting or receiving funds, as well as marketing any financial product, following the court's findings of his 'reckless' behaviour in the financial sector. - read more

Click for more Finance News