The annual IFA performance benchmark survey, which polled 100 advisers, shows IFAs who use paraplanning services typically double the profitability of their business. It says IFAs who specialise in investments generate higher gross margins.
The research shows a marked shift to fee-based advice and trail remuneration.
Higher case sizes, lower-cost client acquisitions and the use of technology and business transacted online are identified as key value drivers.
Owen James organiser James Goad says: “The IFAs who completed the questionnaire have an opportunity to benchmark themselves against similar business models to enable peer group comparisons. We are putting together a series of focus groups to ensure we continue to maximise the value for the industry.”
KPMG strategy practice director Jeremy Oakley says: “These findings show the strong connection between a firm’s recurrent earnings – fees and trail – and profitability. The $1m question of how an IFA funds the transition from initial to recurrent earnings remains a challenge for many.”