Half of IFA firms are facing a drop in profits this year as they focus more on bringing in sales at any cost rather than company fundamentals.
Research from Plimsoll Analysis found 20% of the 1356 IFA firms analysed are currently selling at a loss with profits down for 50% of companies compared to last year.
It found while sales in the market continue to grow, although at a slower pace than last year, this buoyancy is distracting some directors from other areas of the business which require urgent attention.
Around 17% of companies are in more debt now than they were 12 months ago and 164 companies are currently rated as a high risk of failure in Plimsoll’s updated analysis of the IFA sector.
David Pattison, senior analyst on the project, says: “The reality is, sales teams are very rarely privy to the full picture. All too often, they are unaware of the costs of overheads, the levels of debt and how their sales add up in profitability.
"The latest figures do seem to suggest that the focus has switched from profit to sales, as companies grab business almost at any cost! The old adage has never been more apt, ‘sales for vanity- profit is sanity.”
The full updated Plimsoll analysis shows how the UK’s top 1356 IFA firms will cope with the current hostile market. It also includes a future snapshot on each company demonstrating how each might survive this period of consolidation. It names companies that are placed to gain the most and those that need to retreat or sell up.
Copies of the analysis can be obtained for £350, by calling Clair Sherwood on 01642 626400 or emailing [email protected]
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