Planners perform well in a crisis

The latest research into the financial planning industry has shown that despite troubled times, client retention and profitability remains positive.

Advisers have also branched out in their product offerings, with only 15 per cent offering four or less products, down from 23 per cent in 2007, according to the Securitor Future Ready IV report. And while just under half of the practices in the marketplace had a clearly documented succession plan, this was still an improvement from 27 per cent in Future Ready II.

In a positive sign for the professionalism of the industry during the financial crisis, only 1 per cent of practices had made three or more claims against their professional indemnity cover in the last three years, and 97 per cent hadn’t made any claims at all in that period.

Interestingly, practices that conducted more than 90 per cent of their meetings on site recorded $420,000 profit per principal, while for practices that conducted more than half their meetings off site that figure dropped to below $200,000. Many practices were still poorly serviced by signs, parking, public transport and other facilities, the report noted.

The move towards fee income appears to have stalled, with the number of practices reporting more than half of their revenue being generated from fees dropping to 37 per cent from 42 per cent in 2007, while sluggish client acquisition was offset by 40 per cent of businesses reporting the retention of their best clients.

Overall, the average practice revenue was just under $1.5 million with average expenditure of $900,000, and an overall profitability of between 20 and 30 per cent.