A new study from Model Office has revealed that the average financial advice firm is spending 13 hours each week on compliance activities, representing roughly two months of the working year.
The report underscores the growing regulatory burden facing the advice sector, as firms balance the requirements of Consumer Duty with the cost of governance, risk, and compliance functions, claims Money Marketing.
The benchmark report, which draws on data from Model Office’s RegTech software and survey responses from more than 800 retail intermediary advice (RIA) firms, shows that compliance and governance tasks are now consuming between 7 and 18 hours per week. This includes everything from audit preparation to data validation and risk management.
Among the most pressing concerns identified are Consumer Duty implementation, the validation of products and services supporting good client outcomes, and a shortage of skilled compliance professionals. Other challenges include limited budgets, resource constraints, and the pace of regulatory change. Artificial intelligence (AI) has also emerged as a new area of focus—viewed simultaneously as a transformative opportunity and a potential risk by compliance officers.
The study found that direct and indirect compliance costs have risen to 20% of annual revenue, depending on firm size, marking an increase from last year. Meanwhile, one in two firms remain worried that their compliance data is not easily accessible or lacks sufficient quality, while only 33% said they can obtain high-quality compliance data instantly for audit purposes. Half also expressed concerns about the rigour of compliance support provided by external partners.
Despite these challenges, the research highlighted the positive impact of technology on compliance efficiency. According to Model Office, firms leveraging RegTech solutions are achieving cost and time savings of 25–30% on compliance-related activities such as audits. These savings can rise to as much as 50% when generative AI tools are applied.
The report not only identifies pain points but also offers practical guidance for improving governance, risk management, and compliance processes. It calls attention to the need for better data accessibility, improved evidence collection for audits, and more strategic adoption of AI and RegTech to reduce operational strain.
Model Office founder and director Chris Davies said, “It is great to see advice firms testing and trialling RegTech and AI tools, particularly given the survey results show they are now spending over 60% of time on business and compliance activities rather than client meetings, compliance costs are up from last year, plus one in two unsure on data quality and access, all means they are up against it when it comes to ensuring evidencing compliance and sustainable business practice.”
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