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A fifth of top UK IFAs are growing their business by 10% a year, a survey suggests, but at a cost for some of the near-total collapse of their profit margins.
Out of the top 1,000 IFA firms in the poll, 207 reported double-digit growth, according to research by analysts Plimsoll.
However, beneath the headline figures the survey's findings are less optimistic, with 84 of those companies using impressive sales growth to mask dire profit margins.
Senior analyst and author of the Plimsoll research, David Pattison, says: "It makes a nice change to have some positive news to report, with 207 growing increasingly profitable companies which have either tapped into new, fast growing revenue streams or are just the best performers in the old ones."
But he warns not all growth is good for the long-term future of a business.
"There are 2 types of growth in the market - Good & Bad. While 84 companies have achieved over the 10% sales growth, in doing so they have seen their profit margin collapse. They are simply overtrading."
Growth is to be welcomed, but not at the expense of paying the bills, he says.
Of the 84 loss-making firms, nine have been haemorrhaging money for two years, according to the survey.
"Even with double digit sales growth I doubt they will make it to a third," says Pattinson.
"While the market continues to recover and the 207 top performers show the way, there are 176 companies facing a very bleak future indeed.
"Losing sales, profits and probably most of their remaining options, these companies have been rated as 'In Danger' in our report. Time is running out and only a takeover or a rapid turnaround is likely to redeem their situation".
IFA online readers are entitled to a £50 discount on a new special edition of the Plimsoll Industry Analysis - Independent Financial Advisers. Call 01642 626400 for further details and quote reference PR/FL36.
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| Comment | Top UK IFAs growing business but face falling profits |
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Agree with above comment
Absolutely, this is a very simple industry, if the public are with you, they will buy in to the idea and will purchase plans, protection plans which save tax payers money, pensions which also save tax payers money and savings and investments, all of which benefit the people that own them providing they exceed state benefits. With the FSA's regulation ideas sales have gone down, in fact they have dropped like a stone. It doesnt matter what one 'thinks' the public should have or what one 'thinks' is better for them if they dont buy in you failed. You failed, full stop and it isnt working, waken up to the reality. This is failure not even on a scale, it is completely off the scale. More debt in the UK since the second WORLD war. Savings at an all time low and debt at an all time high. What other measurement do they require?
Posted by: Ron
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Misguided Reports and Regulations
Everyone and his dog now pokes it's nose in IFA business. This is because we are an easy target e.g. no one to fight and stand up for IFAs. So we have been abused for years. So lets go back to reality, we are glorified life assurance salesmen (if you can remember that far back - oh I hear the wholier than though very few IFAs shouting professionlis from the rooftops). What we need is to go back to basics, e.g. selling life, pensions and investments with innovative products. But with regulatory interference by monkeys at the FSA and a corrupt government, that will never happen. What we need is someone sensible in the new government to go back to basics and understands what the public really want. Not what Shadow Secretary to the Treasury Conservative minister's mother personal experience was e.g. buying from a bank, so banks are great. Shows how little he knows about the public want and need. Good intelligent and knowledgeable communicators to sell products, not boffins with reams of paperwork to baffle clients and bore them to tears.
Posted by: Incompetent Regulators Award Team