2023 looks set to deliver even more change for advisers – including technological transformation and cost-of-advice tension, according to Adviser Ratings.
The research firm writes that advisers have given an inside look at some of the themes they think will dominate this year. Amongst those themes highlighted by Adviser Ratings were:
- Profitable practices will get clever with their technology use
- Fees will continue to surge
- Advice will continue to be unaffordable for many Australians
- Regulation will be reviewed
Technology Use
Adviser Ratings says that as practices continue to be crunched by costs, more are looking at how they can incorporate technology into their offering.
“Increasingly, we’re seeing more profitable practices make better use of technology to manage clients, which includes workflows, automation and outsourcing,” the firm says.
It also expects to see ChatGPT – the emergent software that mimics human speech – to play a bigger role “…however, we also note some advisers are still dubious about how to best integrate AI while maintaining their more traditional service values.”
Fees will continue to surge
Most practices plan to lift their fees in 2023, an Adviser Ratings survey found.
“In fact, a whopping 93% of practices told us a fee rise is on the cards.”
The firm says few would be surprised to hear this “…in addition to general inflation, practices have faced rising costs for compliance, education and PI insurance, as well as continued high demand.”
It says in the three years to the end of 2021, the median fee jumped 40% to more than $3,500, noting that it’s next Landscape Report will show how fees climbed in 2022.
Unaffordable Advice
Adviser Ratings says that while fee rises are a necessity for many businesses, advice affordability continues to be a tension point.
It notes the matter has been raised consistently by Treasury, the Quality of Advice Review, industry groups, super funds and practices themselves.
“While we expect some measures will be taken this year to bring down the cost of advice, as a result of the QoA Review, the effects will likely take time and prices aren’t expected to drop swiftly.”
Regulation
Adviser Ratings also points to the QoA Review’s lead Michelle Levy handing the review’s report to the federal government at the end of last year, noting it’s now up to Treasury to decide which of the recommendations it will implement.
“While question marks still hang over what will be tweaked, removed or stay the same, several recommendations have the potential to influence fees and costs, as well as advisers’ day-to-day operations,” it says.
