Top-Performing Advice Businesses Have Six Traits in Common


Advice businesses that are enjoying more success, as defined by their Earnings before Interest and Tax margins and owner satisfaction, exhibit six critical characteristics, according to a new report by VBP-backed Elixir Consulting.

The inaugural 2024 Advice Operations Research Report, sponsored by Colonial First State, found top-performing businesses have six things in common:

  • A healthy culture
  • Dedicated Practice Manager
  • Documented processes
  • They outsource tasks
  • Use managed discretionary accounts
  • Engage an external business coach

A statement from Elixir says the report, which is based on a survey of 171 advice businesses, also found a direct correlation between pay and performance, with businesses that reward all employees by paying bonuses and competitive salaries recording an average EBIT margin of 27%.

By comparison, the average advice business has an EBIT margin of 23% after normalising Principal salaries to $150k + super.

They also recorded higher employee satisfaction and culture scores.

Lana Clark …another important lever is optimising operations

The report’s author Lana Clark, Founder of GSD Lab and Senior Consultant at Elixir, says the research highlights the positive impact optimising operations can have on profitability, employee satisfaction and culture.

“It is incredibly valuable having hard data on what’s happening inside advice businesses to give those struggling to create, implement and manage essential operational aspects a compass for achieving back-office excellence,” she says.

“So many discussions about business growth and profitability are focused on recruitment, scale and M&A, but another important lever is optimising operations. Advisers can enhance client service, build a strong culture and mitigate risk by driving operational improvements.”

Elixir Consulting surveyed 171 advice businesses across Australia, representing 561 financial advisers, 43 risk specialists, 72 accountants and 25 mortgage brokers, as part of its research.

Over 50% of participants belonged to a medium-to-large licensee, 11% to a boutique licensee and 37% were self-licensed. A quarter were based in a capital city, 40% in metropolitan areas and 33% in regional areas.

…68% of respondents did not have effective systems for managing workflow…

Sue Viskovic, Founder of Elixir and Head of Consulting at VBP, says the report reinforces the importance of the right technology for streamlining back-office operations, citing that 68% of respondents did not have effective systems for managing workflow.

One third described their systems and processes as “out of date, not documented and not consistently followed”.

She says that her firm knows that “…fully tested and thoroughly documented processes are a critical step, if not an absolute must, to successfully streamlining and automating business operations.”

“The trend towards greater technology adoption is accelerating, which is encouraging to see, but this also increases the importance of cyber security, particularly as systems become more connected and integrated.”

Click here for a copy of the report.

This report stems from Elixir’s practice management research study, conducted in late 2023, which also formed the basis for the company’s presentations at the Riskinfocus 24 events in March where it was revealed that advisers delivering insurance-only advice charge their clients an average advice fee of $1,689 in addition to any commission income they receive (see: $1,689 ‘Risky’ Advice Fee).

Courtesy of Elixir