Revenue per client is one of the most meaningful lead indicators for advice firms, which should be regularly monitored and reviewed as necessary for every client, according to Business Health principal, Terry Bell.
In a quarterly message to advisers, Bell says revenue per client is a useful metric which allows for the relative assessment of the fees clients are paying for the services provided – subject, as always, to overall practice profitability.
Bell notes this key metric is very easy to calculate, to review annually and consider on an individual client basis.
He adds that clients, fees and value are inextricably linked and have occupied a lot of his firm’s attention over the last few months in determining:
- What fees are being charged by Australian advisers
- What services are being delivered
- What elements have changed over the last year
…the average fee charged across the total client base of the firm in 2024 is $3,852…
Bell notes three in four financial advice firms have reviewed their fees over the last 12 months, with Business Health’s latest data revealing the average fee charged across the total client base of the firm in 2024 is $3,852.
In the review Bell lays out “10 client facts” itemising Australian client averages, derived from Business Health’s Future Ready IX Report and its latest consolidated CATScan analysis:
- Age 60+: 55%
- Retired: 45%
- Client for seven or more years: 32%
- Retention rate: 97%
- Satisfaction rating (CATScan): 4.23 out of 5
- Willing to refer their adviser: 87%
- Practice has documented its CVP: 47%
- Contact 10+ times in 12 months: 22%
- Asked for their feedback in past two years: 26%
- Expect ongoing relationship with their adviser: 91%
Bell says while it’s long been his firm’s experience that “…clients are prepared (satisfied even) to pay for their advice experience” this finding was recently reflected with the release by the FAAA of its latest Value of Advice Index, which revealed nine out of 10 advised clients believe the benefits of financial advice outweigh the costs.
…the issue of ‘value’ will come under increasing scrutiny…
“We strongly endorse this sentiment and believe that the issue of ‘value’ will come under increasing scrutiny as operating costs escalate, new competitors enter the market and the children of existing clients (those who will inherit their parents’ savings) begin to ask questions such as: ‘Why this level of fee, what do you do for my parents for this fee?’ and then decide if this represents value for them.”
He says it’s clear there are challenges, threats and opportunities for every adviser, to be ignored at their peril.
“It’s for these reasons that we suggest revenue per client is one of the most meaningful lead indicators…”
