Financial advisers' effort to improve business efficiency in the context of the Future of Financial Advice (FoFA) has paid off, as new research shows that practice profitability has gone up in the last year.
Financial planners are serving more clients at a lower cost; the latest Investment Trends May 2014 Planner Business Model Report shows.
The average cost of delivering full advice fell from $2,400 per client in 2013 to $2,250 per client this year.
While 59% of advisers said that their business' profitability was up in 2013, 72% said the same thing in 2014.
The average number of active clients serviced annually by advisers has also increased from 141 in 2012 to 147 in 2014.
"Rising markets and recovering client numbers are lifting assets under advice and hence revenue," Investment Trends senior analyst Recep Peker said.
Despite improving business conditions, almost all planners (98%) said they were facing challenges in their business, with the typical planner highlighting 3.9 key business challenges.
While 73% of planners said they are facing regulatory-related challenges and 81% are facing business challenges relating to demonstrating value and improving business efficiency.
"Although the regulatory burden posed by FoFA remains a major challenge for planners, demonstrating value to clients and improving business efficiency is now a greater priority," Peker said.
The research also found that advisers are increasingly willing to switch dealer groups in the next 12 months.
In 2014, 10% of advisers surveyed said they are intending to change dealer groups, up from 6% last year, which represents a 55% increase.
"To improve planners' satisfaction, a key area for dealer groups to focus on is enhancing the effectiveness of the advice and review process," Peker said.
"By helping planners provide advice more efficiently and demonstrate value better, dealer groups can boost satisfaction and increase loyalty."
The results are drawn from the Investment Trends May 2014 Planner Business Model Report, based on a survey of 1,038 financial planners in April and May 2014.