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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