High-performing financial advice businesses share common characteristics, as revealed by the 2024 Advice Operations Research Report by Elixir Consulting, supported by Colonial First State. The report, based on a survey of 171 advisory firms and 561 advisers, identified six key factors that define top-performing practices.
Among the key findings was the importance of fostering a healthy work culture, where employees feel valued and integral to the firm’s success. Enhancing client service, building a strong culture, and mitigating risk through operational improvements were highlighted as crucial levers for growth and profitability.
The report emphasized the significance of having a dedicated practice manager to oversee business operations effectively. This separation of roles allows practice principals to focus on strategic growth and client relationships, enhancing overall efficiency.
Documenting processes was identified as another critical factor for success. Firms that meticulously record and define all processes reported higher earnings and improved efficiency. These documented processes are essential for streamlining operations and ensuring consistency.
Outsourcing tasks, particularly administrative and paraplanning responsibilities, can significantly impact a firm’s performance. Delegating such tasks to external providers, often offshore, frees up internal resources and allows advisers to focus on core activities.
Managed discretionary accounts were also highlighted as a key efficiency driver. The report revealed that advisers using these investment vehicles saved significant time, with up to two days of work per week being reclaimed, leading to increased productivity and client engagement.
Engaging with an external business coach was identified as a final component of top-performing advice practices. The report indicated that firms working with business coaches reported higher EBIT margins, showcasing the value of external expertise in driving business growth and profitability.
Industry experts, including Lana Clark from Elixir Consulting, emphasized the importance of operational optimization in driving business success. While recruitment and scale are crucial, operational efficiency plays a significant role in enhancing client service, culture, and risk management.
Despite the challenges faced by smaller advice firms in balancing multiple roles, creating a dedicated practice manager position can be a game-changer. This strategic move allows firms to streamline operations, improve service delivery, and foster a more efficient work environment.
Looking ahead, the financial planning industry is expected to see minimal salary changes for advisers and junior positions in the upcoming financial year. However, the focus on operational excellence and strategic management remains paramount for sustained success in the competitive advisory landscape.
In conclusion, the characteristics of top-performing advice practices underscore the importance of operational efficiency, culture, and strategic decision-making in driving business growth and profitability. By leveraging these key factors, advisory firms can enhance client service, mitigate risk, and achieve sustainable success in a rapidly evolving industry.
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