Amid increasing administrative duties, advisers find themselves dedicating only a third of their time to client interactions.
- Businesses are devoting 65% of their resources to compliance and staff development, impacting client engagement frequency.
- A significant portion of advisers’ schedules, between 6 to 16 hours weekly, is consumed by governance and risk activities.
- Compliance costs are rising, now accounting for 19% of annual revenue, emphasising the financial strain on firms.
- Confidence in compliance data quality is low, with only half of firms trusting their data is readily accessible and reliable.
A recent study highlights the growing administrative burden faced by advisers, with only 35% of their time available for meeting clients. The findings, derived from a study by Model Office and Fidelity Adviser Solutions, underline a trend where businesses allocate 65% of their time to managing compliance, business operations, and staff development. This shift in focus from client meetings is cause for concern within the industry.
The detailed analysis reveals that between 6 and 16 hours per week are spent on governance and risk activities. Such demands not only constrain client engagement but also add to the financial pressures on firms. The report, now in its sixth iteration, offers a comprehensive view of the time and resources that are being diverted from client interactions to meet industry regulations.
Additionally, compliance costs are escalating, now making up 19% of annual revenue. This increase indicates a significant financial burden, especially for smaller-sized firms. The average firm is reported to spend 11 hours a week on compliance tasks, equating to over two months a year, highlighting the intensity of these obligations.
Data confidence remains a concern in the sector, with only 50% of firms confident in the quality and accessibility of their compliance data. This lack of assurance can be problematic, particularly during audits, where instant access to high-quality data is crucial. Only a third of the firms feel assured of gaining quick access to reliable data for audit purposes.
Chris Davies, founder and director of Model Office, noted the substantial time advisers spend on compliance activities rather than client meetings. He advocates for the use of regulatory technology to alleviate these pressures, suggesting that technology can offer significant cost savings and better data management. The report emphasises that AI can play a pivotal role in future compliance management, offering a beacon of efficiency amid the current constraints.
The study vividly illustrates the challenges financial advisories face, highlighting the critical need for strategic solutions in compliance management.
