More than half of the financial planning industry is losing money on the back of the financial meltdown. Andrew Moylan, consultant at The Encore Group, says before the global crisis, the average earnings before interest and tax (EBIT) for the industry was 18 per cent.
In the past five months, revenues have fallen across the board by 20 to 25 per cent.
“When you put those two figures together, then more than half the industry is losing money,” he says. “You can start to see the evidence of that in the practices retrenching staff.”
New figures from the financial planning division of eJobs Recruitment Specialists show industry job ads nationally fell 4.5 per cent in January and 62 per cent over the past 12 months.
“Some boutiques are still looking for staff but we are also interviewing more and more candidates who have been retrenched,” says Trevor Punnett, managing director of eJobs Recruitment Specialists.
However, Moylan says cutting labour costs is not necessarily the solution. “When revenue keeps going up you never look at delivering the most efficient costs to your business,” he says.
“You end up with inefficient business practice – you bring on labour.”