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85 per cent of IFAs moving towards recurring revenue, says Skandia

Eighty five per cent of advisers are looking to increase their percentage of recurring revenue during 2009, according to research by Skandia.

Despite 61 per cent of advisers saying recurring income accounts for only 40 per cent or less in revenue, research by Skandia found that 85 per cent of advisers intend to increase that percentage over the next year.

Research found recurring revenue made up 81 to 100 per cent of business for just 4 per cent of advisers, while 9 per cent said it made up 61 to 80 per cent.

A further 26 per cent of advisers said recurring revenue accounted for 41 to 60 per cent of business, with 29 per cent saying it made up 0 to 20 per cent.

Skandia says the figures from the research suggest that most advisers still rely heavily on initial commission associated with product sales, but are now actively trying to move towards the new model of advice in line with client requirements.

Skandia head of proposition marketing Peter Jordan says: “Recurring income becoming a more desirable income stream for advisers indicates that offering a more comprehensive ongoing service to clients is high on the agenda.

“This is likely to be mainly in response to demand from clients but it has the added benefits of being in line with the way regulation is shaping the market and ultimately will create long term value in the business of the adviser.”

Advisers looking to concentrate on recurring income need to demonstrate that they are servicing those clients on an ongoing basis, says Jordan. He says: “Advisers looking to increase recurring income must also ensure their service matches the nature of the remuneration they receive.”

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