Advice firms predict revenue growth as high demand acts as catalyst for confidence

A new report has revealed that as many as 83 per cent of financial planning firms expect revenue growth to be good or very good over the next 12 months.

The report, titled, The People Profession: New Opportunities for Growth, compiled by NAB found that the outlook for financial planning firms is positive, driven mainly by a greater demand for their services.

“Most firms I work with are excited about the stabilisation in terms of adviser numbers and the fact that there are more clients to target than there are advisers to look after them,” said Philip Pleasant-George, client director at NAB, who works with financial planning firms.

“Strategically, they’re focused on how they attract the ideal client and grow that relationship.”

NAB also explored the challenges burdening advisers and found that overwhelmingly, regulation serves as the biggest barrier. Namely, 56 per cent of the 34 financial planning firms it surveyed said regulation was their biggest challenge, followed by time management at 50 per cent, and hiring and retaining staff at 41 per cent.

“Getting quality staff and attracting the best talent continues to be a challenge,” Mr Pleasant-George said.

“Advisers are doing a great job of continuing to build trust with the public, which in turn will see more students elect to move into financial advice.”

Other government policies and balancing work and time with family and friends sat at an equal 35 per cent, while technology proved a challenge for 29 per cent. Stress and anxiety, as well as managing cash flow, and succession planning were flagged as key challenges by 21 per cent of advisers.

Looking at growth plans, NAB revealed that more than half of the firms it surveyed are looking to buy, having realised that they need scale in order to meet increasing compliance and regulatory requirements.

Namely, according to the statistics, 49 per cent plan to purchase, while 21 per cent are looking to sell, and 30 per cent are yet to make up their minds.

“Many firms are realising they need to get bigger in order to afford the technology and automation that will keep them efficient and competitive, to keep their business viable, and to provide opportunities to staff and to maximise client outcomes,” said says Adam Holster, professional services banking executive, NAB.

In fact, top priorities when considering an acquisition are said to be increasing scale, followed by cultural fit, speed to profitability, expansion into new geographical markets, scale-up for future exit, and more career pathway options for their workforce.

‘A lot more confidence to move forward’

Commenting on NAB’s findings, Glenn Calder, chief executive officer of Viridian Financial Group, said that he was not surprised that advisers are predicting growth given there are “fewer and fewer” advisers to service a growing pool of retirees and pre-retirees.

"Financial planning has a more professional workforce than ever before,” Mr Calder continued. “We’re raising efficiency and effectiveness and the industry is consolidating. That gives us a lot of confidence to move forward.”

Moreover, he opined that, in order to capitalise on these opportunities, financial planning firms need to build scale.

“We’re finding a lot of groups are coming together, which allows them to invest in technology and professionalism,” Mr Calder said.

“If you’ve only got a handful of advisers then your ability to specialise is limited. Once you get to 15 or 20 you can have a chief investment officer, an aged care specialist, an estate planning specialist and so on, which becomes a point of difference for the firm.”

Additionally, he highlighted the need to attract new graduates to replenish the profession’s diminishing numbers.

“It’s a bit like what the AFL did 10 to 15 years ago – everyone was given a footy and a jumper, which inspired a new generation of people into the game. That’s paying dividends now. We, as an industry, need to band together and do the same.”

According to Wealth Data, as at 13 October, total adviser numbers sat at 15,701, down 97 for the calendar year and an increase of 142 so far, this financial year.