Personal Touch Financial Services upped its profits by 21 per cent last year, despite network numbers falling 42 per cent.
New management strategy aimed at putting quality ahead of quantity changed the shape of the membership profile, the network said.
In order to achieve the planned reduction in numbers of both low volume firms and larger firms which sat outside of the desired risk profile, the network increased fees and introduced enhanced support for its remaining core membership.
Despite “significantly reduced network numbers”, annual turnover fell by just 20 per cent, with productivity increasing for the third consecutive year, now standing at £54,000 per member firm.
Max Wright, chief executive at Personal Touch, said: “The past couple of years have put some major demands on the adviser sector and networks particularly with the additional regulatory costs and need for vigilant risk management.
“Over this period we have made decisions which at the time may well have appeared unusual or even reckless compared to others, but we knew it was absolutely essential for us to be ahead of the game and migrate to a new network model which put the consumer first.
“We had to get rid of the dabblers and the firms that were draining resource at the expense of others. No other network has pro-actively terminated firms in the way we did, but no doubt others will now follow our lead as those still practising the old model are increasingly proving how broken it is.”
Overall gross profit margins increased 20 per cent during the past year with total expenses, including board costs, down by a total of 11 per cent.
Mr Wright added: “As one of very few privately owned networks we are deservedly proud that even at the end of the first year of a long-term business strategy, we continue to have a positive balance sheet and the ongoing commitment and support of our major shareholder LDC.”
In the intermediated mortgage market, Personal Touch reported a strong performance as the mortgage market generally recovered with continued low interest rates.
“MMR places a much greater emphasis on the need for advice and in a time of predicted growth in mortgage volumes, it is anticipated that the intermediated market share will grow further,” stated Mr Wright.
