South African independent advisers are operating at a time characterised by extreme volatility, uncertainty and disruption. Against this, advisers may need to rethink how they structure, resource and scale their practices.

This is one of the key takeouts from the recently released Adviser Barometer 2024/2025, a study compiled by the Lang Cat, a UK-based consultancy, and commissioned by Allan Gray. Based on nearly 600 responses from advice businesses who use the Allan Gray Investment Platform, the Barometer offers a nuanced view of South Africa’s advice landscape – one that extends beyond traditional research into fund and platform preferences, according to Daniel van Andel, Head of Platform and Adviser Proposition at Allan Gray.

“The advice industry is facing real challenges, but there’s also enormous opportunity,” says van Andel. “Many practices have untapped capacity, and the right blend of technology, strategic planning and client-centred focus can unlock long-term value.”

While the Barometer is not comprehensive of the entire SA financial advice landscape, van Andel says it does offer a relevant and valuable departure point.

“It also provides comparisons drawn to UK-based practices, which offer insight into the evolution of the advice profession elsewhere – including trends that could shape our own path and differences likely to persist due to fundamental distinctions in our respective markets,” van Andel notes.

Firm structures, resourcing and efficiency

The report reveals considerable diversity in firm size and operating models, with the average firm having a team of seven people. “The support staff-to-adviser ratio varies widely, signalling opportunities for more strategic practice management and better use of technology to boost efficiency,” says van Andel.

The report finds that the average adviser currently manages 155 clients, with some believing they can handle more – with the ideal number reported at 163. This is, however, already well above the ideal number of 119 reported in the UK – despite the UK being more technologically advanced.

“It will be interesting to see whether technological advancements in our market can increase the ideal number or whether it will reduce as advisers come to terms with escalating compliance requirements and clients who continue to indicate a preference for in-person advice.”

Only 9% of firms have started using AI tools, but interest is growing with 39% expressing curiosity and planning to explore its potential. “Practical, easily implementable use cases remain limited at this stage,” van Andel observes, “but that is bound to change.”

Revenue models and a continued servicing focus

The report also surfaces key insights into adviser charging models. Ongoing asset-based fees remain dominant – 48% of firms charge clients 0.5% annually – and nearly half of firms report no revenue from initial advice fees. Alternative models, such as hourly consulting-based fees or charging for the implementation of a plan, remain relatively uncommon, used by just 26% of respondents.

“Regulation can change this quickly and some advisers expect their businesses to gravitate toward what we typically see in the UK, with two-thirds of revenue stemming from ongoing asset-based fees, and a third from various activity specific charges.”

In terms of client servicing, top-tier clients continue to receive the lion’s share of advisers’ attention, with an average of nearly five personalised engagements per year. The core offerings across most firms remain focused on investment and financial planning, including tax advice. However, softer services like behavioural coaching and life planning are yet to be fully embraced: Only 40% of advisers see these as core, while 26% do not offer them at all.

Offshore advice that is locally led

Offshore investing continues to play an important role in client portfolios. Most firms engage in offshore structuring but remain largely comfortable servicing these assets from within South Africa.

“Only 14% of advisers expect a quarter or more of their assets under management (AUM) to accrue to beneficiaries based abroad,” says van Andel. “It is therefore unsurprising that only 11% of firms are actively pursuing offshore licensing or the opening of overseas offices.”

The future outlook

The financial advice profession faces challenges in attracting new talent (only 22% of respondents believe there is a clear career path for new entrants) and meeting the expectations of younger clients.

“In an environment where growth is expected, but margin pressure is mounting, how firms think about succession planning and adapt their models – not just their advice – will be key to long-term success and sustainability,” concludes van Andel.

To access the full Adviser Barometer 2024/25 please click here: https://www.allangray.co.za/globalassets/adviser-webinars/langcat/adviser-barometer.pdf