Only three functions received majorities of over 40% in one ‘time-category’, with client facing work (billable), client research / admin (billable) and compliance (not billable) all taking 6-10 hours a week of adviser time.
Phil Billingham, managing director of PBA Ltd and vice-chairman of SOFA, comments:
“Over 400 firms of IFAs have taken part in this research which showed that the two biggest drivers to increased profitability were reduced regulation (53%) and improved use of technology (30%). As most IFAs do not have the ability to control regulation it is absolutely clear that technology is the most realistic driver which firms can use to help themselves survive and prosper in the new era. It is therefore vital that the industry invests in technology training and usage if the IFA sector is to remain successful.”
These are some of the key findings from the ‘Profit Through Fees’ research project conducted by leading adviser technology supplier, 1st Software, supported by The Association of Independent Financial Advisers (AIFA) and Phil Billingham Associates Limited (PBA).
Higher producers (IFAs earning more than £200k per annum)
- Only 14% of the ‘higher producers’ spent 5 or less hours a week on client facing time, compared to 30% of IFAs as a whole
- Less than 5% spent 5 hours or less on other office billable time (compared to 20% of smaller IFAs)
- The majority (47%) of higher producers spend more than 11 hours a week with clients, making it the biggest time-commitment compared to any other IFA activity
- Higher producers’ second-highest time commitment was office billable client research (40% doing more than 11 hours a week of this) with the lowest time commitment to training/CPD (2%)
Lower producers
42% of IFAs who took part in the survey produced less than £100k of revenue in the past 12 months. Of these ‘lower producers’:
- Over 40% spent less than 6 hours a week with clients
- Just under 20% spent more than 10 hours a week on compliance, compared to 17% that spent more than 10 hours a week with clients
- The most time-consuming activity of all, amongst this group, was client administration and office research – over 17% of small IFAs claimed they did over 16 hours a week of this
- 82% of lower producing IFAs (earning less than £100k per annum) spend 10 hours or less a week with clients, which represents the lowest time commitment of all other IFA activities, except CPD and training. A significant 94% of smaller firms spend 10 hours a week or less on this.
Tracey Mullins, director of public affairs at AIFA, comments:
“The research shows how much time is taken in work not directly linked to seeing clients and is a powerful insight into what really takes up the time of IFAs – and perhaps suggests ways of managing that time. It is clear from the research that IFAs – of all sizes – believe that the main factors which would help them spend more time with clients are a reduction in regulatory requirements (53%) and more effective IT support (29%). It may well be that by investing in IT, this will aid compliance with regulations, reduced time spent on administration and, in turn, will free-up more time to spend with clients.”
Following the results of the research project, 1st Software has teamed up with the Institute of Financial Planning and Justin Urquhart Stewart of Seven Investment Management, to investigate the future prospects and focus for building a profitable business model, the ‘New Model Adviser’. Throughout September, IFA firms will be invited to a series of New Model Adviser briefings to learn more about the new way of working and the route to profitability, whilst maximising client service.
Rory Curran, managing director of 1st Software, comments:
“Whilst there is more analysis to be done, it is clear that this research has confirmed much of the anecdotal ‘evidence’ that has been circulating in the profession for a number of years. Of especial interest is the fact that whilst the average amount of time with clients seems to be around 15 to 20%, higher producers are around double this figure at around 30% of a working week. Whilst the research confirms that differences in production are not just about time, time is still clearly a factor, and one that lower producers will need to address as we move towards a fee based environment.”
Throughout August, over 400 IFAs took part in the ‘Profit Through Fees’ research, with questionnaires being sent to 17,500 AIFA members, 10,000 users of 1st Software’s Adviser Office technology and 1500 PBA contacts.
A copy of the White Paper can be obtained free of charge via www.1stsoftware.co.uk.
