In many ways, the financial advice industry is almost unrecognisable today, compared with five years ago. Professional standards, changed regulations and mass departures have produced a new landscape.
It stands to reason, then, that the average adviser and client have changed significantly, too, in a very short period.
Using insights from our soon-to-be-released 2022 Landscape report, we delved into some of the standout changes. Keep in mind, the industry lost thousands of advisers in 2021, with most departing in the year’s final quarter, before the exam deadline.
Source: Adviser Ratings - 2022 Australian Financial Advice Landscape report
1. The average adviser’s salary increased slightly…
Amid the dwindling workforce and increasing client demand, some advisers got a slight pay rise last year. Our research shows the average adviser was earning $130,000 in 2020. Last year, the average salary rose 3.8 per cent, to $135,000.
However, inflation was also on the rise and is forecast to continue its upward trajectory this year. Annualised CPI rose 3.5 per cent in 2021, Australian Bureau of Statistics data shows.
2.…As did median fees
The mean advice fee remained at $4000, but the median fee continued its upward trend. It increased from $3256 to $3529 in 2021. The median ongoing fee has gone up 41 per cent since 2018 (from $2501).
3. Markets lifted funds under advice (FUA) per adviser
As equity markets delivered for clients in 2021, the average FUA per adviser similarly shot up. Across Australia, it lifted from an average $74 million in 2020 to $79 million in 2021.
4. The volume of ‘one-off’ clients increased
Following the first 2020 lockdown, there was a steep rise in the number of one-off clients advisers were serving. These clients were often trying to navigate new terrain, including government packages such as JobKeeper and the requirement for a Record of Advice following the Early Release of Super legislation.
The average number of one-off clients rose to 27 in 2021, from 20 the year before. These clients made up almost a quarter of the typical adviser’s client base last year, compared with a fifth in 2020. However, that will likely rebalance in the coming year.
5. The average adviser and client are a little bit older
In 2020, the average adviser was 48 and lived in inner Melbourne. The average age last year rose three years to 51; however, Melbourne is still the city of choice for the typical adviser.
The average client still presented as a couple, but was also slightly older, at 60, compared with 58 the previous year.
The takeaway
It’s no secret that advisers are being asked to do more with less in a shrinking workforce. As a result, we’ve seen businesses become nimbler and more selective about clients. Examining the makeup of the average client base will help you see where you stand – and what you could potentially do to position your business for the future.
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Comments3
"a good summary looking forward to the details. Interesting to note that the average ongoing fee has increased but has the average number of ongoing client increased?? because I've either stopped fees or sacked clients the past 2 years. "
Roland Knight 16:33 on 21 Apr 22
"Does the average fee include insurance commission or is this in addition to the average fee?"
AndrewP 09:24 on 21 Apr 22
"Thank you Adviser Ratings. Valuable information. Looking forward to : Adviser Ratings - 2022 Australian Financial Advice Landscape report."
Peter Donovan 08:07 on 21 Apr 22