In CoreData’s Q4 2020 Adviser Pulse Check Survey we asked advisers to tell us approximately how long it takes to produce a simple statement of advice, a comprehensive statement of advice and a record of advice. We split the responses by the number of advisers in the practice: sole practitioners, practices with two to five advisers, and practices with more than five advisers.
There’s a clear relationship between the size of the practice and the time it takes to produce advice documents – the more advisers there are, the less time it takes. This may be because the number of advisers in a practice is a proxy for the number of support staff a practice has, and the resources available to produce the documents.
It’s not a massive surprise it takes a sole-practitioner advice firm longer to produce an advice document (of any sort) than an adviser in a larger firm. What is more of a surprise is just how much longer it takes – it takes a sole-practitioner advice firm, on average, 33 per cent longer to produce a comprehensive SoA than it takes an adviser in a practice with more than five advisers. A sole practitioner takes on average almost 20 hours to produce a comprehensive SoA, whereas an adviser in a larger firm takes less than 15 hours, on average.
The difference broadly similar for simple SoAs. Sole-practitioner firms take, on average, about 10 hours to produce a simple SoA, about 30 per cent longer than it takes firms with five or more advisers.
But it’s not as simple as just saying smaller advice practices are at a natural and inevitable efficiency disadvantage to larger practices. As part of the same research we asked advisers to tell us whether it’s taking them more time or less time now than it was a year ago to produce an SoA.
Almost six in 10 (59.3 per cent) sole-practitioner practices say preparing a comprehensive SoA takes longer now than it did a year ago. But more than seven in 10 (72.6 per cent) advisers in practices with two to five advisers say it’s taking them longer, and more than six in 10 (61.6 per cent) advisers in practices with more than five advisers say it’s taking them longer.
In fact, around one in eight (12.3 per cent) sole-practitioners say it’s now taking them less time than it used to, compared to half that number (6.5 per cent) of advisers in practices with two to five advisers. Around 15 per cent of advisers in firms with five or more advisers report it’s taking less time than a year ago.
Despite their relatively small size, sole-practitioner practices still appear to be finding ways to improve efficiency and streamline the production of advice documents. When we asked them why it was taking less time now to produce a comprehensive SoA, firms that have reduced the time said technology has played a role (60.0 per cent), along with non-technology-related improvements to advice and business practices (50.0 per cent) greater familiarity with the process of producing the documentation (50 per cent).
Technology has played a largely similar role for practices with two to five advisers, with just over six in 10 (62.5 per cent) saying it’s improved SoA efficiency. But it has played a much more significant role for practices with more than five advisers, with every one of the practices now taking less time to produce an SoA saying the efficient application of technology has played a role.
A key factor in how advice practices are able to improve efficiency is the support they receive from their licensee. Small advice practices whose advisers are authorised by large licensees may be able to capture some of the efficiencies and economies of scale facilitated by the licensee, whereas small advice practices operating their own AFSL or whose advisers are authorised by small licensees may well be at a disadvantage. That’s an issue we’ll be looking into further.
