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Top firms reveal ‘secrets to their success’

A study by Standard Life and NMG Consulting canvassed the opinions of 25 advisory firms across the UK, identifying what sets them apart from firms that could be judged as ‘competent’ or ‘struggling’ in a post-RDR world.

Among the firms that took part in the study are Almary Green, Baigrie Davies, Yellowtail Financial Planning and Capital Asset Management.

In a 52-page report, it was revealed that sample firms typically generated 89 per cent of their revenue from just 10.7 per cent of their client base, while almost half reported at least 50 per cent of their advisers had certified or chartered status.

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Less than a fifth of the firms surveyed were set up in the past three to five years with two-thirds having been in business for more than a decade.

For more than half - 54 per cent of respondents - income at the firms came from post-RDR arrangements with only 21 per cent based on trail and other pre-RDR streams. The majority - 80 per cent - reviewed their business plans at least once a year with more than half doing this several times a year.

Most of the firms, 60 per cent, also have a net profit margin greater than 20 per cent, with average pre-tax profits hitting £392,173.

The average profit for each active client was £452, £47,136 for each adviser and £14,271 for each employee.

Writing in the introduction to the report, Innes Miller, head of business service for Standard Life, said it was clear that firms cannot be on the backfoot in their approach to regulation.

She added: “Successful advisory businesses do not ‘carry on’ until regulatory pressure or financial necessity forces change on someone else’s terms. They seek to control their own destiny through strong leadership and efficient execution.”

Philip Bailey, investment consultant for Hertfordshire-Provisio Wealth Management, said: “We have always had a clear view of where to take the firm. We have been RDR-compliant in 2008 and we did not do that because it was convenient for regulatory purposes.

“We are not trying to shoehorn clients into particular services. When it comes to client revenue, the 80/20 rule is still credible. That said, we have not gone through a loss of clients in the segregation exercise.”

Typical practices at the ‘top 25’

Tools and practices usedNumber of firms
Asset protection policy24
Regular board meetings21
Code of ethics/conduct21
Monthly review of ‘key initiatives’20
Non executive directors9