The COVID-19 pandemic and subsequent demand from new clients arrived when many advisers were already stretched and time-poor.
Looming education deadlines and increased regulatory pressure resulted in fewer hours in the day to service clients and grow businesses. While the shift to home-based working may have reduced commute times, it also laid bare inefficient processes and poor technological solutions for some practices.
With new business vulnerabilities exposed, the gulf between strong and barely-surviving businesses has widened in the past year, according to our 2020 Landscape Report. Further analysis shows differences in practice management and the use of technology have set apart businesses in a defining year.
Strong businesses have nailed their value proposition and built scale in tough operating conditions. Their valuations have held firm and demand for their services grew.
At the same time, struggling businesses have continued to battle inefficiencies and complex processes. They have also been more greatly affected by the end of grandfathering arrangements at the start of this year.
The productivity divide
As the gap between practices widens, interesting trends have emerged around how profitable businesses are spending their time.
Virtual Business Partners ran a survey of 96 advisers across four market segments* and found a correlation between higher incomes and new client meetings and business development.
Businesses in the top revenue bracket (more than $500k) spent 44 per cent of their time meeting clients and 36 per cent of their time on business development.
However, it was a very different story for businesses at the bottom of the revenue table. Those bringing in between $80 and $150k spent 24 per cent of their time on client meetings and 13 per cent on business development, Virtual Business Partners found. Unfortunately for this group, a much greater proportion of time (39 per cent) is spent on administration and plan preparation, the survey found.
The solution is to outsource these time-zapping tasks and focus more energy on client acquisition and business growth, as Virtual Business Partners pointed out. Taking note of these patterns could help businesses to reposition themselves for greater profitability this year.
The SoA time challenge
Finding both efficient and compliant ways to produce Statements of Advice continues to be a key challenge for advisers.
On average, advisers are spending 12.81 hours producing a SoA, Virtual Business Partners found. Bigger practices spend more time on average (14.25 hours), in part due to the numerous desks the document must cross.
One in five practices were unable to turn around an SoA in 10 days or less, the survey found.
Some delays in the production of SoAs are unavoidable. Sometimes the client doesn’t provide the right information in a short timeframe.
However, some factors are within the adviser’s control. Advisers armed with the right paraplanner, workflows and technology to easily share files may be best placed to cut down on unnecessary delays.
A key takeaway is practices need to develop the right processes and invest in the right technology and team to free them up for client meetings and business development. Given the ever-increasing pressures on businesses, there’s no time to delay.
*Solo Advisers, Multi Adviser Firm 2-3, MultiAdvice firms 4-5 and Large Advice Firms 6+advisers