Maximising EBIT: Budgeting Strategies for Financial Advisory Firms

As we approach the end of the financial year, it’s time for firms to review their budgets for the upcoming year. At VBP, our consulting team frequently speaks, whether on stage, in articles, or directly with clients, about strategies to improve efficiency and build both profitability and sustainability in Australian advisory firms. Below, I’ve summarised key benchmarks and strategies to support your 2026 budgeting process. 

Key Considerations 

• Most advice firms aim for an EBIT between 30% and 40% (our Operations Research report found an average EBIT target of 32%). 

• High-performing firms in Australia achieve around 40% EBIT. 

• The average advice firm typically achieves an actual EBIT of 22% to 24%. 

• Rising operational costs remain a challenge—especially wage increases, ASIC levies, and the Compensation Scheme of Last Resort (CSLR) fees. 

Budget planning usually goes hand-in-hand with thinking about team capacity and productivity. When team members see how hiring decisions affect the business and their own day-to-day roles, they’re often more motivated to work smarter and find better ways of doing things. 

Profitability doesn’t occur organically; it’s the result of deliberate planning and regular review. Annual budgeting is essential to align business goals and set clear expectations for your advisory team. Fortunately, advisory firm budgets are relatively straightforward to forecast due to the consistency of recurring service agreements and ongoing demand that exceeds supply in the advice sector. 

It’s a common misconception that the moment advisers feel busy, it’s time to hire another adviser. But why add a $200k–$300k annual cost if they’re not yet close to generating $800k–$1 million in revenue? (That figure includes employment costs, levies, licensee fees, and other on-costs.) This also assumes you can even hire an adviser in today’s tight labour market. 

Benchmarks for High-Performing Firms 

Advisory firms that perform at the top of the market generally meet these benchmarks: 

• EBIT of 35%–40% 

• Revenue per adviser of $800k–$1 million 

• A team-serviced client model that enhances service quality, reduces key person risk, and allows advisers to serve more clients 

• Standardised, tech-leveraged processes with task allocation across both onshore and offshore teams 

How These Firms Achieve Profitability 

Achieving these benchmarks requires intentional strategy planning and execution. Here are three of our favourite tactics: 

1. Implementing an effective, tailored pricing model

There’s no one-size-fits-all pricing approach—your model must align with your firm’s structure and client base. A strong pricing model includes: 

• An annually updated fee calculator to reflect business cost increases 

• Base fees that are calculated to cover costs and target profit 

• A variable value overlay based on client complexity and net worth, ensuring fairness and reflecting the value provided 

The fee calculator is used annually to renew service agreements and inform fees for new clients. With demand for advice exceeding supply, many advisers report minimal resistance to establishing minimum fees of $5,000 and above.  

This year, many firms are increasing base ongoing fees by at least 5% to keep pace with rising costs. 

2. Releasing legacy clients from service agreements

As firms evolve, some long-standing clients may no longer require full-service advice but continue paying. Set growth targets – for it. Transitioning these clients to a ‘pay-when-required’ model not only benefits them, but also frees capacity to serve higher-value clients with more complex needs.

3. Setting clear adviser targets

Firms should set growth targets, such as the number of new clients needed annually, and allocate these to team members based on capacity. Where senior advisers are at capacity, clients can be transitioned to other advisers, enabling those most capable of winning new business to do so. 

Considerations for FY2026 Budgeting

Here are key factors to consider as you prepare your next budget, to ensure financial stability and growth: 

Staff Pay Increases

Many firms lose top talent because they haven’t kept pace with market rates or mistakenly think they “can’t afford” wage increases. With CPI currently in the high 2% range, failing to increase wages effectively results in a pay cut for your team. The result is significant loss of loyalty and productivity when in truth, the issue often lies in pricing and efficiency, not affordability. 

Explore this article for a real-life example of a firm who discovered they were underpaying their current team while hiring a new CSO. They had to increase their current team’s pay by $78k and raise their budgeted salary offer by $17k. Rather than an expensive lesson, it turned out to be a very successful turning point in their business. 

Budgeting for New Team Members 

As your client base grows, plan not just for salaries but also for associated costs: hardware, software, insurances, office space, adviser levies, and licensing fees (if hiring authorised reps). If full-time local hires aren’t feasible, consider building a global team. A trained CSO or paraplanner in Cebu typically costs about 40% of an onshore equivalent, and frees up your local team to focus on high-value work and lifting adviser capacity to see more clients. 

Rising Operational Costs 

Some firms take a forensic approach to estimate their rise in expenses, while others apply a percentage uplift. Don’t forget to allocate funds for CSLR and ASIC levies. Consider the impact on your PI premiums if making acquisitions or experiencing significant organic growth. Review your P&L for potential savings, especially unused software subscriptions. 

Revenue Opportunities Through Fee Uplifts and Client Changes 

While managing expenses is important, long-term profitability is driven by revenue. When setting income budgets, account for fee uplifts, client service changes, and new business.

When we support coaching clients with budget planning, we typically collaborate with the management team on expenses and involve advisers and senior operations staff in setting income targets.

By working through enquiry levels and client capacity, the team builds a more accurate forecast and feels more engaged in the process.

We find that most of our firms share their revenue budgets with their teams and regularly track their target versus actual revenue. Some firms choose not to share expenses (and therefore profit) figures with their team, but we find that those who do usually end up with team members who are also conscious of eliminating wasteful spending, particularly those who share in a team bonus if the business meets its milestones.

When setting revenue targets, it is generally helpful to convert the revenue figures into client activity, so that they focus on the activity that will impact the numbers, rather than the numbers themselves.

If you have tried planning before and your EBIT still is not where it needs to be, have a chat with our team. Sometimes, a shift in strategy or the right kind of expert support is exactly what is needed to unlock your next level of profitability. Even the most successful firms ask for help. Let’s get started.