Financial planning practices are missing out on big bucks by failing to leverage their infrastructure to lift their bottom line, according to research.
Although average revenues at planning practices have increased profits have remained stagnant, Business Health principal Rod Bertino said.
Financial Planning Practices' revenues have increased by an average of 11 per cent in the last 12 months, to $766,234 per year, but the average expenditure has also increased - up 12 per cent to $568,200 per year.
Bertino cited the increasing cost of doing business, more demanding clients expecting more for less and the cost of attracting and retaining quality staff.
"Strategies to grow revenue include referrals from centres of influence, referrals from existing clients, increased marketing of the practice, attracting better clients and reviewing the existing pricing and fee schedules," he said.
Of more than 25,000 clients surveyed by Business Health, 86 per cent said they were willing to refer their adviser to friends, family and associates.
"Business improvement does not just happen. While most advisory practices do not need a business plan per se, they do need a plan for their business. It should cover four fundamental areas: where am I now? Where do I want to be in 12 months? What will we do to get there? And then regular reviews to make sure you're on track," he said.
The average annual profit per principal for practices with no documented business plan is $94,859, compared to $120,663 for those businesses with a partial plan and $212,107 for those with a fully implemented plan, the research found.
