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Advice firms only spend 35% of time on client meetings

Advice firms only spend 35% of time on client meetings

Advice firms are now spending 65 per cent of their time on business, compliance and staff development needs and only 35 per cent on client meetings, according to new research by regtech platform Model Office.

The findings revealed that firms are spending between six to 15 hours a week on governance, risk and compliance activities.

The report by Model Office, now in its fourth year, surveyed 120 advice professionals in September 2022 and then compared those responses with actual data from its regtech software system, gathered over the previous six months.

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The new report focused on the compliance costs and challenges that financial advice firms face.

It found that one in three firms are concerned about attracting the right skilled resources to the compliance department and a further one in three are concerned about regulatory enforcement.

Around one in four were worried about the speed of regulatory change and lack of regtech awareness.

Source: Model Office-MO® Cost of Compliance Survey 2022

The system data coupled with the research responses found some trends across the challenges of rising costs within the industry and general economic conditions.

It showed the biggest challenges over the next 12 months are the consumer duty, lack of budget and resources and the volume and implementation of regulatory change.

Source: Model Office-MO® Cost of Compliance Survey 2022

Regulation and compliance

The direct and indirect cost of compliance ranges between 9 per cent and 23 per cent of annual revenue dependent on firm size.

Source: Model Office-MO® Cost of Compliance Survey 2022

Just under three quarters (70 per cent) said professional indemnity insurance costs are the main challenge. 

Around one in four firms said compliance skilled resources are keeping them up at night.

Chris Davies, founder and director at Model Office, said: “This report shows RIA firms feel they are up against it when it comes to compliance costs and ensuring they have the data and MI required to comply with the regulations that keep coming. 

“RIA firms, these days, have a really tricky job balancing the day-to-day running of their business with keeping on top of compliance challenges that, if left unchecked, threaten irreparable damage to profit and reputation."

Davies added: “I’m heartened by an increased acceptance from most compliance professionals that regulation technology, can save significant costs and time and provide meaningful data and MI plus some great opportunities that will lead to improved client outcomes under the new consumer duty regime.” 

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