Where the money leaks in an advice practice

An advice practice accumulates a specific kind of blindness. Not missing data — the data is all there, in the portfolio system, the CRM, the file notes, five years of client email. What is missing is the signal: which of three thousand relationships needs attention this week, and which can wait.

So reviews run on the calendar instead of on events, because a calendar is the only thing that scales when nobody can hold the whole book in their head. That works right up until the calendar and the event disagree — at which point the calendar wins, because it is the only one of the two that anybody scheduled.

Take your advisor headcount. Multiply by the share of the week that goes to file preparation, meeting summaries, status updates and re-keying. Multiply by fully-loaded cost.

On 20 advisors, a 40% administrative share and A$180,000 fully loaded, that is 8 full-time equivalents and roughly A$1.4 million a year sitting inside a line item that nobody manages as a line item.

The arithmetic is trivial. The reason it is rarely done is the middle term: your actual administrative share is a number most practices have never measured. They estimate it. The estimate tends to run low, and low by a wide margin, because the work is spread thinly across everyone’s week rather than concentrated anywhere it could be seen.

Measuring that ratio properly is about a week of work. It is also the entire basis of the business case — which is why we measure it before proposing anything.

A quarterly review cadence means the average position sits about 45 days between checks. The worst case is 90.

None of that is controversial — it is simply what quarterly means. What follows is not controversial either: any opportunity whose window is shorter than the gap is, on average, missed. Tax-loss harvesting windows. Rebalancing drift past tolerance. A life event mentioned in an email that nobody connected back to the portfolio.

So the question is never whether this happens; the arithmetic settles that. The question is how many and what they are worth. And unlike the administrative share, that one is computable from holdings you already have. It is the first thing worth quantifying, because it either justifies the whole exercise on its own or tells you to stop.

Most practices hold five or more years of client communications that nobody has read end to end. Not through carelessness — reading them is not humanly possible at that volume.

We want to be precise about the claim, because this is where sector commentary usually overreaches. That archive is an unexamined surface, not a known problem. Anyone who tells you what is in yours before reading it is guessing. What can honestly be said is that the surface exists, that examining it has recently become cheap, and that whether it is worth examining is itself a question with an answer.

Model a representative sample of client portfolios against individual objectives, tax positions and known life events. Measure the administrative share directly rather than estimating it. Quantify the review-gap cost from real holdings. Then rank what surfaces and pick one thing.

If the numbers come back small, we say so. A practice running a 20% administrative share and a monthly review cadence has a materially weaker case than the one modelled above — and it is better for everyone that this shows up in week one than after an implementation.

It does not tell you your numbers. Every figure above is arithmetic run on illustrative inputs, chosen because they are plausible — not because they were measured at a particular firm. No client engagement underlies any of it.

The two inputs that matter most are the two you would have to supply: your administrative share and your review cadence. Change either and the case changes with it. That is the honest position, and it is also why the first step here is a measurement rather than a proposal.