Tamara Morey
A wise man once told me that the problem with the world today is that there is too much emotion and not enough data. Operating an advice practice always has, and always will be, a numbers game.
Put more clients in the funnel to convert more new clients.
Get clear on your cost to serve to build out your advice fees.
And know your true adviser capacity.
These days, adviser capacity is a topic hotter than a seat at a Swift concert. And with adviser numbers dwindling and practice operating costs rising, the clear solution is to help advisers to service more clients.
So what is the ideal number of clients for a financial adviser? Is revenue a better indicator of an adviser’s capacity? And how do we fairly measure their capacity?
Thoughts on this vary widely. And sure, it’s impacted by the level of service provided to said clients, amongst other things. But we know one thing for certain – we have to improve on what we’re doing now.
Based on the 2023 Iress Financial Advice Efficiency Report, the average client list per adviser has dropped to just 129. That’s too low. The latest Business Health report states a higher figure of 184 clients per adviser and up to 280 for high-performing practices.
In line with these stats, the 150-client mark seems to be a common place for advisers to land and what many deem a “respectable number”. This is an interesting position when others out there are successfully hitting the 280 to 300-client mark. If you can help more clients and make more money, why wouldn’t you?
The Business Health report also claims an average of 1.8 FTE support staff per adviser for high-performing practices versus 1.5 in other practices. It’s simple math, really. More support staff equals more adviser capacity. And with two (good) FTE support staff, an adviser can manage around 300 clients.
With an adviser only having so many working hours in the week, it would make sense to measure “capacity” by the number of direct support people available to that adviser. (Contrast this with the commonly-held notion that an adviser’s capacity equals their existing client base. Coincidence? I don’t believe so.)
Now, before you go handing out support staff to every adviser – there is an upper limit! Imagine an adviser stripped back to only client meetings and post-meeting file notes. With 20 meetings a week, they can maintain a comfortable workload and even find time for the occasional long lunch.
Some of you might shudder at that number, but I’m sure you all know an adviser operating this way right now, supported by a good team. The only difference between these few bold advisers and those settling around the 150-client mark is the decisions they make around their support. That’s it.
With the array of outsourcing options available, “finding the right people” is no longer the problem. And if you’re already operating with two support staff (or equivalent outsourced support) with less than 300 clients, what do you need to let go of? It’s time to spring clean your process.
Many practices we work with don’t know where to start in re-shaping their operations for greater capacity. The research is clear: start with building your team.
March 1st, 2024
Published on Advisely