Advisers need to budget profits as an essential ‘cost', on a par with rent and staff wages, or risk going out of business, warns the head of financial planning at Macquarie Bank UK.
John Baxter, who runs the multi-national’s division to transition IFA firms for the RDR, says a profit margin of less than 30% is “inadequate”, and less than 20% is “dangerous”. But he calculates more than half of the sector is loss-making or has a profit of less than 5%. He told delegates at the Personal Finance Society (PFS) conference most IFA businesses do a great job for clients and staff but a “woeful” job for their companies’ profitability. “You need to view profit as an essential cost of your business, on the same side as staff wages and the rent. If you are not profitable yo...
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