Platform choice to help advisers serve 650,000 more Australians

New research commissioned by Colonial First State (CFS) has revealed the critical role that technology and platform choice plays in helping financial advisers serve more clients. 

CFS commissioned independent research firm Empower Business Advisory to conduct a comprehensive study on advice business processes, with the goal of quantifying the cost-to-serve, assessing the profitability of delivering advice, and understanding the levers we can pull to best support advisers. 

The CFS Advice Practice Profitability Report has been released in conjunction with FirstChoice Business Optimisation, a dedicated implementation service for new and existing FirstChoice advisers. 

The report found that advisers are aiming to lift business profitability and increase capacity to serve. Over the next three years, 54% of advisers want to increase revenue per client and 50% want to serve more clients annually. 

Financial advisers manage 110 ongoing clients each, on average, but aspire to serve 152 – provided business hurdles are overcome. With 15,500 advisers industry-wide, an additional 42 clients each could lead to 650,000 more Australians receiving ongoing financial advice, increasing the total to 2.4 million. 

Two-thirds of advisers cite hurdles to advising more clients. They are not constrained by the demand for advice, but rather their ability to supply it profitably while keeping advice affordable. Inefficiencies in providing advice is the most commonly cited hurdle, followed by ongoing servicing requirements and capacity constraints.

Platform choice is a key influencer in how many clients advisers can serve profitably. The research reveals those who use CFS FirstChoice in their platform stack serve the largest number of clients on average and have the highest incidence of serving clients profitably. Advisers attribute this to CFS FirstChoice’s effectiveness in servicing clients with simpler portfolio needs, reducing complexity in their business and lowering the cost of serving clients.

Commenting on the findings, CFS Group Executive Distribution Bryce Quirk said the report confirmed the important role that technology plays in reducing the cost to serve and giving more Australians access to advice. 

“The CFS Advice Practice Profitability Report shows that, on average, advisers who use CFS FirstChoice as their primary platform serve 24% more ongoing clients compared to their peers,” Mr Quirk said. 

“The report also confirms preliminary research¹ that found advisers are experiencing a meaningful reduction in client onboarding time when using CFS FirstChoice onboarding powered by Elemnta,” he said.

“As a result, we look forward to continuing to work with advisers, reviewing their operational set up and supporting them in identifying and implementing efficiency opportunities. Our new FirstChoice Business Optimisation service is dedicated to helping advisers implement the Elemnta onboarding tool and integrate managed accounts to unlock efficiencies,” Mr Quirk said. 

Recep III Peker, Founder and Managing Director of Empowered Business Advisory and author of the report, said the financial advice industry is poised to undergo significant transformation over the medium term.

“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. As part of this advisers, advisers are aiming to simplify their operations and reduce the cost of servicing clients, while seeking to increase their revenue per client as an outcome of delivering greater value,” he said. 

“Taken together, this shows clear intent to boost advice quality and business profitability while simultaneously getting advice to more Australians,” he said. 

The Advice practice profitability report was produced by independent research firm Empower Business Advisory. The analysis is based on an online survey of over 300 financial advisers and paraplanners/support staff, run between 28 May and 7 June 2024, with respondents invited from both independent sources and the full database of CFS FirstChoice users. The was weighted slightly to be representative of Australian financial advisers.