Advisory firms must consider client recruitment plans or be stung by an ageing population.
As Australia's population continues to age, advisers must begin thinking about ways to recruit new clients as existing clients stop contributions and begin drawing down on their investments post retirement, independent advisory firm Business Health has said.
"Our findings show that 83 per cent of practices generate 50 per cent or more of their revenue from existing clients. At the same time data also reveals that 51 per cent of existing clients are 60 years and over," Business Health partner Rod Bertino told InvestorDaily.
"This is not to say that businesses that aren't recruiting are not running profitable operations at the moment, but as more clients stop making contributions and start drawing down on their investments, it is an issue that all firms need to start thinking about."
In particular, Bertino said practices that were looking to grow needed to consider ways they could recruit new clients.
"While existing clients can be a great source of referrals, some might need to look to referral arrangements with stockbrokers, accountants, mortgage brokers or solicitors," he said.
"About 63 per cent of referrals from professional sources turn into leads but despite this the majority of practices still have no referral arrangements with professional firms, with the majority of those that do still only having one."
Bertino said whether or not firms looked at marketing or other ways to recruit new clients, it was a conversation practices needed to have.
Business Health data was compiled at the end of 2009 from more than 500 advisory practices and 40,000 client surveys.
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