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APFA report shows profits down for financial advisers

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The Association of Professional Financial Advisers has published its fourth report on the sector, revealing a steady increase in turnover continued in 2015 (up by 8 per cent), but profits (both before tax and retained earnings) took a significant hit in 2015, each down by roughly GBP100 million, representing a fall of 10 per cent in pre-tax and 65 per cent post-tax profits, down to GBP61 million. 

Chris Hannant, director general of APFA believes that this is down to the ‘massive increase in FSCS levies’. He writes: “The margins in the sector remain thin.”
 
The report reveals that the number of advisers and the number of advice firms remains stable, despite the reported volume of merger and acquisition activity. The number of firms has remained more or less constant for the seven years of data.
 
Hannant says: “Although I believe that elsewhere the FAMR final report could have gone much further in ensuring access to affordable advice for consumers, we welcomed its recent recommendation that changes be made to the current FSCS levy approach.  The figures we have released today show the urgent need to replace the existing system with one that is sustainable and fair.  Only when advice firms’ business models are sustainable and profitable will they be encouraged to enter the market and innovate to help close the advice gap. We look forward to engaging with the forthcoming FSCS levy review and urge both the government and the FCA not to shy away from undertaking the significant and radical changes which are necessary to reduce the regulatory burden on financial advisers and cut the cost of advice.”
 
The report can be read here.

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