As the 2024-25 financial year draws to a close, forward-thinking financial advice practices are already developing their business plans for FY25- 26. With industry transformation accelerating, the latest Adviser Ratings Musical Chairs Report for Q1 2025, which provides detailed data on adviser movements and licensee changes, and the forthcoming 2025 Australian Financial Advice Landscape Report, which offers insights into practice profitability, client engagement strategies, and operational best practices, are invaluable benchmarking tools to position your practice for success in the year ahead.
Industry Dynamics Every Practice Owner Should Consider
Before finalising your business strategy for the coming financial year, consider these key shifts revealed in the Q1 2025 data:
1. The Growth Opportunity is Real
After years of real and then perceived contraction, adviser numbers increased by 0.63% in Q1 2025, bringing the total to 15,575 registered advisers. This modest growth, driven by both new entrants (125) and returning advisers (236), signals expanded capacity to meet consumer demand and opens up new opportunities for your practice.
Industry overview Q1, 2025. Source: Adviser Ratings' Musical Chairs Report
Practices should assess whether your growth targets align with this emerging market expansion. With client leads up 36% year-over-year according to previous Landscape Report data, practices with the capacity to onboard new clients may find fertile ground for expansion.
2. Business Model Evolution Continues
While practices switching licensees has significantly decreased over the last 3 years, the advice landscape continues its structural transformation, with 78.2% of advisers now operating under privately owned licensees. Small practices (1-10 advisers) grew by 1.5% in Q1 alone, while mid-sized firms (11-100 advisers) expanded by 2.4%.
Practice Distribution by licensee segment. Source: Adviser Ratings' Musical Chairs Report
As a practices, it is important to evaluate whether your current licensee arrangement still serves your strategic objectives. With adviser switching between licensees at a five-year low, those who have found the right fit are experiencing greater stability, a crucial foundation for sustainable growth. But not switching and hanging on for the sake of staying with your existing licensee can also be detrimental to your practices growth plans where there is a lack of alignment.
3. The Pricing Challenge Intensifies
The fundamental disconnect between consumer willingness to pay and the cost of advice delivery continues to pressure business models. Most consumers remain willing to pay only $500 annually, while regulatory and operational costs necessitate fees of $3,000-$4,000 for traditional service models.
For most practices, worrying about consumer expectations of how much advice should cost is an irrelevant consideration, reviewing your service tiers and pricing structure against your the cost base for your practice is critical. The most successful practices are developing innovative approaches to bridge this gap, including hybrid service models, digital-first engagement strategies, and specialised service offerings to bring down their cost base and improve profitability.
4. Technology Investment Yields Clear Returns
Data from previous Landscape Reports shows tech-savvy practices operate with 55% fewer staff while achieving profit margins up to 11 percentage points higher than less digitally mature peers. This operational efficiency creates a competitive advantage in both profitability and pricing flexibility.
But technology in and of itself isn’t always the answer if you haven’t mapped out your advice process end to end. Audit your current technology stack against your strategic objectives and client journeys. Are you leveraging digital tools to streamline operations, enhance client experiences, and reduce service delivery costs? The coming financial year may be ideal for strategic technology investments, particularly with the explosion of Artificial Intelligence.
5. Succession Planning Remains Critical
With approximately 40% of practices still lacking a nominated successor and nearly half having a succession horizon under 10 years, this remains a significant strategic vulnerability for many businesses. It's crucial to address this now to ensure your practice's continuity and long-term success.
If you don't have a documented succession strategy, prioritise this for the new financial year. A clear succession framework enhances practice value and provides operational contingency even for younger practice owners.
Business Planning Framework for FY25- 26
As you develop your plan for the coming financial year, consider structuring your approach around these key elements:
1. Client Segmentation and Service Strategy
The Q1 data shows that 55% of growing practices target specific client types rather than accepting all comers. This selective approach allows for more efficient service delivery and marketing which improves all aspects of practice efficiency and ultimately profitability.
Review your client data to identify your most profitable and satisfying client relationships. What characteristics do they share? How can you refine your offer to attract more clients with these attributes?
2. Staffing and Capacity Planning
With adviser numbers stabilising and experienced professionals returning to practice, talent acquisition may become slightly easier in FY25- 26. However, competition for top performers will remain fierce.
Evaluate your current team structure against your growth objectives. Do you have the right mix of skills and experience? Are you operating optimally, or are there opportunities to streamline operations or leverage outsourcing? How can you support new entrants and create a practice they commit long term to?
3. Regulatory Readiness
The December 31, 2025, deadline for Financial Adviser Register qualification updates looms large, with approximately 4,100 advisers still needing to update their records. Additionally, the transition from Statements of Advice to Client Advice Records presents both challenges and opportunities. It's essential to ensure your compliance framework is fully prepared for these changes to maintain control and avoid potential disruptions. More immediately, one off insurance commission authorisations will be required over the first half of FY25 - 26 to ensure commissions aren’t switched off.
Ensure your compliance framework is prepared for these changes. Are all adviser qualifications properly documented and recorded on the FAR? Have you begun planning for the CAR transition? How are you managing the one off insurance commission authorisation?
4. Technology Investment Roadmap
A clear investment roadmap is essential, with technology proving to be a key differentiator in practice profitability. Previous Landscape Report data shows that the most successful practices are implementing integrated systems that reduce administrative burden while enhancing client experience.
Assess your current technology stack against best practices. Are there gaps that should be addressed in the coming financial year? Which investments would yield the greatest efficiency gains?
Leveraging the Reports for Strategic Advantage
The quarterly Musical Chairs Reports and annual Landscape Report provide invaluable benchmarking data to inform your strategic planning. Understanding where your practice sits relative to industry trends allows you to identify opportunities and potential vulnerabilities before they impact your business.
The Q1 2025 Adviser Ratings Musical Chairs Report offers detailed data on adviser movements, licensee changes, and strategic analysis of the forces shaping the profession's future. The 2025 Australian Financial Advice Landscape Report will provide even deeper insights into practice profitability, client engagement strategies, and operational best practices.
These reports offer essential competitive intelligence and strategic guidance for practice owners serious about optimising their performance in FY25- 26. As you finalise your business plans for the new financial year, consider how these industry insights can sharpen your strategic focus and accelerate your path to success.
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