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Listed IFAs are set for lift-off, says Durlacher

The market has turned for listed IFAs, with sales set to grow towards the end of the year, according to exclusive research from investment bank Durlacher.

Durlacher analyst David Pannell, the author of the report, says even though most IFA firms have been significantly loss-making, with share prices of publicly listed companies falling on average by 40 per cent in the last year, there are positive signs ahead.

He points to Inter-Alliance, Millfield, Berkeley Berry Birch and Lighthouse as those firms jostling to become the first to reach monthly profitability, likely by the end of the first quarter of 2004.

Consolidation is the most realistic way forward, says Pannell, identifying eight firms that could lead the way – Inter-Alliance, Millfield, BBB, Lighthouse, Bankhall, Tenet, Aegon and Sesame.

The report, The End of the Beginning, published this week, sees the bank changing its sector recommendation from sell to hold/buy on the back of estimations that the market has now hit the bottom and is beginning to grow.

It believes that although demand for regulated products fell 15 to 20 per cent year-on-year from 2002 to 2003, the upturn in demand will even-tually generate profits.

The report marks a distinct change from Pannell&#39s first look at listed IFAs in February 2003 when he predicted high-profile failures in the sector.

Millfield chief executive Paul Tebbutt says: “The market is certainly turning but it is still very hard work for IFAs to change the public&#39s perception. As with all the other companies listed in this report, we certainly have the ability to secure smaller IFAs and help them weather the current storm.”

Pannell says: “The future regulatory regime is now reasonably clear and should generate no major issues. Difficult trading and professional indemnity/regulatory capital issues mean that many smaller businesses are exiting the industry.”


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