The UK's largest adviser firms have lost up to 40% of their value in the last two years while one in four has had to increase debts just to maintain market share, a report suggests.
The study of 200 firms, by Plimsoll Publishing, also found 65 have failed to increase sales, 51 are selling less than they were two years ago and 132 have failed to increase sales at the same rate as their investment.
Plimsoll says the results, which also show the UK’s largest 200 firms now control 80% of the market - 4% more than in 2006, suggest companies begin “a serious re-think” of their business models.
It adds selling-up may be the most appropriate action in a number of cases given the state of the market.
David Pattison, senior analyst with Plimsoll, says: “The recent slowdown in the UK economy will only accelerate a long standing problem in the market.
“Following the last few years which have been largely profitable, business leaders have been keen to invest heavily, and in turn have borrowed heavily. Yet due to the turbulent economic climate of 2008 they are seeing very little by way of return.
“This ambitious investment strategy has left some companies in severe financial danger, and as a result 24 companies have been awarded a danger rating in this study as result of their failing business strategy.”
Pattison adds: “The consequences are serious; these companies need to have a serious rethink when it comes to their business models.
“It’s likely that jobs will be lost and key projects could be cancelled in an attempt to control the spending- but for some companies it could well be a case of too little, too late.
“It’s likely that the management at some of these companies could be changed to accelerate the cutback process, as it’s a lot easier for new managers to come in with a clear remit and instigate these tough decisions.
“The other obvious option is that some of these businesses will be sold off.”
But Pattison says the financial turmoil may present the “more visionary leaders” in the market with the opportunity to steal some ground on their competitors.
“It’s a great time to go on the offensive- if you have the cash reserves to do it without placing your own business in jeopardy,” he says.
The Plimsoll 200 Independent Financial Advisors Analysis report is available for £500. Call Clair Sherwood on 01642 626422 or emailing [email protected] Readers can get a £100 discount when quoting PR05.
020 7034 2636
Consistency and compliance vs. slower reaction time
Search for replacement to begin imminently
60+ £300bn ISA savings
Has technology moved on?
Total funds on list rise from 26 to 58