2Plan two years from profit

National IFA 2Plan Wealth Management says shareholders may have to wait two years until the firm is profitable, despite reporting a 1000% increase in turnover in 2008.

Chief executive Chris Smallwood says the company, which launched in July 2007, expects to attain a "positive" cash flow by August next year before breaking into profit a year later.

Earlier this week, 2Plan published its 2008 results showing turnover of £3.2m, more than 11 times its 2007 figure of £281,000.

"We are not in a profit-making situation yet," Smallwood says, "but we are well ahead of our business plan."

He says improving business at the IFA means it is becoming less reliant on investment from its major shareholder Standard Life, which owns 15% of the business.

2Plan initially received £4m from Standard Life at launch and drew down an extra £1.75m late last year.

But Smallwood says the company will only require "around" £1m from the asset management giant in 2009.

"Because we are ahead of plan, we don't need to draw down the funds as quickly as we first anticipated," he says. "We will still draw down funds, but at a slower pace than originally thought.

"We are a bit back to front really compared to other companies. We had the investment first and then set out from there."

Smallwood says 2Plan remains on target to recruit 1000 advisers by the end of 2012, despite currently being less than a fifth of the way there.

The IFA boasts an adviser force well over 100, a huge jump on the 22-strong team at the end of its first year.

"We said we would be around about 180 half way, so we are more or less bang on," he says. "We hope to have 250 by the end of this year.

"What's been interesting for us is that advisers, especially in the directly authorised market, are starting to run into trouble.

"I think they are nervous about the capital adequacy increase and the consequences of the RDR, so we are having a number of approaches from these types of firms, who maybe a year or so ago wouldn't have thought of joining us."