The report found that as adviser numbers continue to fall, dropping from around 16,700 in 2022 to close to 15,700 as at May 2023, client numbers per adviser have increased. The average number of active clients per adviser has risen to 120, the firm said, which is up from 113 a year ago.

As client numbers grow, so too does profitability, with 38 per cent of advisers reporting an increase in business profitability compared with a year ago.

This trend is even more pronounced among self-licensed advisers, which saw 41 per cent report an increase in practice revenue in 2023, compared with 39 per cent in 2022.

“It’s encouraging to see the positive business outcomes advisers are experiencing. As things stand, new client acquisition is, on an average basis, no longer loss-leading and those advisers who see growing profit margins have the largest client books (143 clients vs 120 industry average),” said Dr Irene Guiamatsia, head of research at Investment Trends.

The driving factors behind the growing profit margins of the more profitable advisers include efficient systems, admin support, and increased fees and cost discipline.

While the cost to produce advice has risen by 9 per cent during the period ($3,580, up from $3,280 in 2022), Investment Trends found that advisers on average have increased their fees by 25 per cent for upfront fees ($4,000) and 18 per cent for ongoing relationship fees ($4,700).

Thoughts on QAR

The survey also canvassed advisers on their feelings relating to the Quality of Advice Review (QAR), specifically related to whether it can improve accessibility, affordability and quality.

Investment Trends said that advisers “emphatically agree” the first two outcomes would be met, but express reservations about the latter. In particular, the majority of advisers are uncertain on the ability for super funds to provide advice, with 53 per cent saying it would have a negative impact on their business.

“Advisers – and the industry as a whole – have worked very hard to address issues around conflict, and it is natural to see some hesitancy around what some may construe as a return to old ways," added Dr Guiamatsia.

“The sector faces the important challenge to chart a cohesive path to a future state where different advice delivery mechanisms that can cater to different client groups and different life stages co-exist harmoniously – ultimately supporting a growing cohort of Australians with preparing for retirement.”

Streamlined fee consents and the proposed removal of statements of advice were both extremely well received by advisers, with 87 per cent and 57 per cent, respectively, saying these measures would positively impact their business.

The change from a best interests duty to good advice was also broadly welcomed with 47 per cent saying it would be a positive compared with only 6 per cent saying it would be negative. Forty per cent of advisers were also on board with the benefits of digital advice and just 17 per cent saw it as negatively affecting their business.