The advice market has suffered from capacity constraints in recent years, with an apparent excess of demand over supply. Adviser numbers have been growing steadily, but the pandemic has stalled progress and recruitment continues to be a challenge for advice firms of all sizes. Advice firms are now looking at other ways to alleviate their adviser capacity issues, and one way is to try to boost the productivity of advisers and their teams.

Part of the problems with adviser productivity is that it can mean different things and can be measured in several ways, which led to vigorous debates among advice firms at our Platforum roundtable discussions. The good news is that quantitative measures like average retail investment revenue per adviser or number of clients per adviser show large increases in adviser productivity since 2016.

But these metrics may hide a more sluggish rise in adviser productivity. Much of the increase in revenue per adviser can be explained by global stock market performance rather than any genuine improvements in efficiency.

Advisers at our roundtable discussions suggested that some of the key drivers of real adviser productivity are:

  • Increased and better use of technology in the advice process and other parts of the business.
  • More effective incentivisation of advisers and other staff behaviours.
  • Improved targeting of clients to ensure that advisers deal with issues that they understand thoroughly, and advise efficiently and at lower risk – perhaps leading to more specialisation.

The challenge is to measure these with simple and reliable metrics like amount of client contact time by advisers, data inputting time per client, and extent to which advisers deal with target client segments.

Increasing adviser productivity can help alleviate capacity issues, according to the advisers we spoke to, but the main challenges are the basic shortage of qualified advisers and the rising regulatory burden.

Our UK Financial Advisers: Market Overview report is being published next week. For more information, please get in touch.