Increasing the amount of trail income, employing high-quality administrative staff and actively targeting sources of referrals are the three key factors for success in adviser businesses, according to research commissioned by threesixty, the fee-based adviser support services provider.
The research, which was carried out by Paradigm Partners on behalf of threesixty, looked at 23 firms of varying sizes across the UK and found that these three recurrent themes were found in the most successful businesses surveyed in the research, which was based on profitability per adviser.
Increasing the amount of renewal income in company annual revenue was a major factor in adding value to a business. Firms that preferred renewal commission, as opposed to initial, demonstrated a commitment to long-term growth. Although it varies with the product mix of business written, most firms target a renewal figure of 40% annual income within five years of being formed.
There was a general agreement that FPC-qualified administrative staff justified their additional salary by offering both compliance and report-writing services to advisers. The survey also showed that a business usually grows faster if it targets potential sources of referrals, such as solicitors and accountants. Other success factors included moving towards a paperless office, more use of technology and existence of clear business plans.
David Ingram, a partner at threesixty, said: "This report is much more than facts and figures, Paradigm Partners spent a day with each of the 23 businesses surveyed. As a result we are now using our findings to start up workshops for our clients on how they can improve in those key areas."
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