The directors of big IFA businesses have seen big cuts in salary and bonuses compared with general brokers, according to a report from IMAS corporate advisers.
The annual report compares the fortunes of the top 200 general and life distributors in the UK based on company accounts.
Directors of big IFAs with turnover above £10m saw their income fall sharply by 20 per cent. Smaller IFA businesses with turnover below £10m saw income rise by 10 per cent but this was at the expense of profitability.
On the general side, big personal lines brokerages saw directors' pay increase by 29 per cent.
Remuneration for employees in IFAs with turnover of more than £10m fell by 12 per cent to £32,089 while smaller IFAs with turnover below£10m saw a 3 per cent increase to £31,259.
IFAs below £10m turnover saw employee costs as a percentage of sales at 34 per cent compared with 24 per cent at bigger IFAs, roughly on a par with personal lines brokers while costs in commercial brokers were higher.
All sectors saw increases in revenue but financial services again trailed other brokers. Smaller IFAs saw an increase of 12 per cent while bigger IFAs had a rise of 5 per cent.
Profit margins increased by 16 per cent within big IFA distributors while smaller operations saw the lowest rise at 4 per cent.
The change in profit from 2001/02 was 29 per cent for bigger IFA operations but fell by 65 per cent for smaller IFAs.
In terms of employer productivity, the only sector not to improve revenue per employee was IFAs with a decline of 15 per cent. Large personal lines businesses showed the most improvement with a 38 per cent increase.
IMAS managing principal Oliver Laughton-Scott says: “Financial services had a torrid 2003 but strengthening equity markets and the ever-growing need for advice suggests that this sector is undervalued. The weakness of many existing operations spells opportunities for new entrants.”