Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Older, more productive advisers are earning less money… for now
The average financial adviser in Australia is 52 years of age in 2024, a full three years older than the average last year according to this year’s Adviser Ratings Financial Adviser Landscape report.
They’re also bringing in more revenue. The average adviser’s funds under administration per adviser climbed $7 million this year, from $82 million in 2023 to $89 million in 2024, with the average annual client fee nudging up from $4,250 to $4,300.
Yet while advisers are more senior, look after larger tranches of capital and bring in more revenue for their practices, they actually make slightly less money. Average adviser salaries climbed from $135,000 in 2022 to $145,000 in 2023, but dipped back down to $140,000 in 2024.
It’s an incongruous twist in the evolving adviser landscape, where the numbers of advisers has declined since the Hayne Royal Commission upended the industry in 2018. That number seems to have stabilised, however, with the amount of registered advisers falling only 1 per cent to 15,623 in 2024.
The salary anomaly is “nuanced” says Adviser Ratings managing director Angus Woods, who notes that an increase in the number of provisional and junior advisers coming through the ranks has dragged the average salary down “1 per cent to 1.5 percent”.
While younger advisers are coming into retail advice, he tells The Inside Adviser, many older advisers have abandoned retail advice in favour of a purely wholesale advice model catering to high-net-worth clients. This shift, Woods adds, has partly been driven by the “cost and legislative factors” associated with retail advice.
The good news
These factors should abate, Woods believes, and “salaries will continue to rise significantly” as the impending Delivering Better Financial Outcomes reforms reduce compliance and advisers continue to harness technology, including AI tools.
“The evidence shows that practice owners are fairly savvy on their cost base now,” Woods says. “They’re investing in technology as well as outsourcing, and they are increasingly willing to invest in good advisers (as either equity owners or senior salaried advisers).”
The Retirement Income Covenant, which requires trustees to develop retirement income strategies for members, should also provide remuneration tailwinds.
“Funds will go about looking for external advice relationships which will help create a funnel of effectively “free” clients, meaning that the associated marketing or acquisition costs will be zero,” he says.
Bigger workload
Salaries aside, the increasing demand for advice is presenting itself on adviser books in dramatic fashion.
Retail advisers now have an average total client base of 129 clients, comprised of 97 recurring clients and 32 “one-off” clients. This is up from 119 average total clients in 2023 (91 recurring, 28 one-off) and 115 average total clients in 2022 (88 recurring and 27 one-off).
Funds under administration per practice has also increased significantly in line with increased demand. At $225 million per practice in 2024, FUA is up about 9 per cent ($205 million) in the last year and 11 per cent on 2022 ($200 million).
