The study also showed that between 6-16 hours a week is being spent on governance, risk and compliance activity.
These findings and more are revealed in the latest advice industry benchmark report by Model Office in association with Fidelity Adviser Solutions, now in its sixth year. Model Office analysed data from its RegTech software where over 900 retail intermediary advice (RIA) firms use MO’s RegTech benchmarking, and AI heat mapped dashboards and Fidelity Adviser Services network of advisers.
This report continues to focus on the compliance costs and challenges that financial advice firms face. Other key findings from the report include that the direct and indirect cost of compliance averages at 19% of annual revenue dependent on firm size, an increase from last year, and that the average firm is spending 11 hours a week on compliance activities (over two months a year or 27% of their time).
Worryingly, only half (50%) are concerned their compliance data is not easily available and quality levels are poor, and only 33% are confident they can gain instant access quality compliance data for an audit.
The report explores the most important issues, recognises where improvements have been made, highlights areas that will need to be addressed, and provides some practical suggestions for managing governance, risk and compliance costs and challenges.
Chris Davies Model Office founder and Director says:
“We thank Fidelity Adviser Solutions for partnering with us on this year’s report. With advice firms spending over 60% of time on business and compliance activities rather than client meetings, compliance costs up from last year, plus 1 in 2 unsure on data quality and access, they are up against it when it comes to ensuring evidencing compliance and sustainable business practice. I’m pleased by an increased acceptance from most compliance professionals that regulation technology, can save significant costs and time and provide meaningful data and MI plus AI is on their horizon when it comes to compliance management”
