There is a huge and widening gulf between firms making outstanding profits and those losing money, according to research released today.
The latest Plimsoll Analysis, which profiles each of the UK's top 1,000 IFAs, found average profit margins have fallen to 13.5% of sales, compared with 15.1% year on year. It also found that 262 of the UK's top 1,000 IFAs are now running at a loss.
Some 129 of these companies are now considered to be a high financial risk, and for 96 they are in the red for a second year running. On average these companies are losing -3% on sales meaning that every £1 of sales is costing them £1.03 to deliver.
However, the same study has revealed 192 businesses are making record profits, with an average profit margin of 35.1%.
Some 106 of these firms are operating completely debt free and average sales per employee for these firms are £106,900.
Plimsoll senior analyst David Pattison said: "This analysis highlights the fact that the industry is being split into two types of company and the gap between the rich and the poor is getting bigger and bigger.
"For the companies that are falling behind, they need to re-evaluate their strategy and retain profit in order to improve their financial strength."
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