The total pre-tax profit in the advice sector increase by a quarter last year, latest data from the FCA shows.
An analysis of regulatory returns shows that 96 per cent of financial advice firms reported making a profit in 2018, with total pre-tax profits up to £872m from £698m in 2017.
Commissions, unsurprisingly, are continuing to fall as a percentage of revenue. Other good news comes from data on professional indemnity insurance cover, where premiums for renewal remained steady as a proportion of revenue – around 1.5 per cent across all firm types.
While the makeup of the market remains similar, with nearly 90 per cent of financial advice and mortgage broker firms employing five or fewer adviser staff, evidence of a move to restricted status is finally starting to emerge.
Restricted advice now accounts to 37 per cent of market revenue when compared to independent advice, when it was 33 per cent in 2016.
Smaller advisers tend to pay a higher proportion of revenue on PI bills, around 4 per cent.
Mortgage revenue continues to make up around 5 per cent of financial advice firms’ turnover.
The smaller the adviser, the higher the profit margin they appear to make.