Advice sector ‘thriving’: Practice revenue up more than 5%

According to early data from the Adviser Ratings Advice Landscape study, the financial advice sector is “thriving”.

The average increase in advice practice revenue is more than 5 per cent, Adviser Ratings said, while 35 per cent of practices have recorded 15 per cent revenue growth.

The company said the uptick in revenue is a “reflection of the increased value and demand for professional financial advice”.

“As we forge ahead into 2024, the financial advising sector is witnessing a remarkable transformation,” Adviser Ratings said.

“Early data from the ongoing Adviser Ratings Landscape study indicates a period of significant growth and opportunity for financial advisers.

“This year is not just another tick on the calendar but a watershed moment for the industry, marked by rising revenues, stable costs, and improved insurance terms.”

The study found that aside from revenue increasing, operational costs are also showing stability and leading to healthy profit margins.

More than 60 per cent of practices are enjoying profit margins above 20 per cent, the study found.

“This financial health is creating a ripple effect, particularly in the realm of adviser salaries,” Adviser Ratings said.

“As practices become more prosperous and strategy-driven, the demand for skilled advisers is soaring, making it an auspicious time to be in the industry.”

Adviser Ratings also attributed some of the “narrative of growth and prosperity” to the transformation of professional indemnity (PI) insurance.

Richard Silberman, founder and managing director of Numerisk, said there has been a more nuanced, data-driven approach to underwriting that has led to “significant premium improvements”.

Mr Silberman added that 2024 could be an opportunity for practices to reassess their PI insurance.

“At a minimum, premiums should be flat with substantial improvements in excesses and coverage or considerable reductions,” he said.

Looking at the increased revenues, stable operational costs, and improved insurance terms, Adviser Ratings predicted that salaries are also expected to rise.

“In this environment, advisers are more than just financial experts; they are in high demand as strategic assets to practices focusing on growth and client engagement,” it said.

“For financial advisers, both seasoned and new entrants, this is a clarion call. The market conditions are aligning in a way that favours skill, innovation, and strategic planning. It’s a time to harness these favourable conditions, to grow and to thrive.”