National IFA Ashley Law has warned that it needs to double either its turnover, the number of IFAs or both in order to remain “sustainable” in the future, despite posting a profit of £262,330 for the year to the end of October 2012.
The latest profit turns around a loss of £94,133 for the previous year. However, the IFA posted a turnover of £3,884,181 for the 12 months, a significant drop from £4,475,134 in 2011.
The firm’s director said the action it needed to take was “not likely to be achievable” due to pressures created by the Retail Distributuon Review and that the firm is therefore looking at “alternatives” to support its advisers to “trade profitably”, hinting that the business may be wound up.
Jock Cassidy, director of Middlesex-based Ashley Law, said in the statement: “As a result of increased costs in relation to services for regulatory support, professional indemnity insurance costs etc, in order for the company to sustain profitability it would need to double the number of IFAs/turnover.
“This is not likely to be achievable in the next 24 months, due to the uncertainties created by the changes that will be introduced from January 2103 as a consequence of the RDR. The company therefore has decided to explore options to ensure its IFAs and non-investment advisers will be adequately supported and to enable them to trade profitably.”
The results highlighted that the group made gross profit of £365,128 at the end of October compared to £775,081 for 2011. During the period the group received an advanced payment of £342,000 in relation to its right to receive “certain further commissions”.
However, the payment terms mean that the company could be subject to a partial repayment over the next 30 months and, depending on developments in the future trading years, “it may be necessary to consider prudent provisions being made in 2013”.
The results also highlighted that the company has not got any borrowings or “onerous contractual agreements”.