Denver (Aug. 13, 2004) -- Having a Certified Financial Planner certification may have a positive effect on firm revenue, according to a study by the Financial Planning Association.


Firms with a CFP certificant on staff had over $300,000 more in revenue than firms with no CFP professionals on staff, and CFP-certified owners had over 50 percent greater pre-tax income in their practices than their non-CFP-certified counterparts, according to the 2004 FPA Financial Performance Study, sponsored by SEI Investments and produced by Moss Adams LLP. Participants in the study included 638 financial advisory firms with total revenues of $471 million reported in 2003.


“This year’s results call attention to the importance of continuing education within the financial planning arena,” says Mark Tibergien of Moss Adams. “The results also suggest that firms will need to find ways in which to accelerate their revenue growth in order to combat rising costs.”


According to the report, assets under management or advice increased 34 percent, with half of the growth attributed to portfolio performance and half to new assets. More than 20 percent of participants had $1 million or more in firm revenue, double the figure from five years ago.


Single-professional firms increased revenue by 21 percent, but suffered a notable decline in operational efficiency, the FPA said. While more money is being made, the study found that much of it is going toward rapidly increasing overhead expenses.


In addition, survey results noted that the gap between the top 25 percent of firms and the other 75 percent of firms is widening. Owners in the top 25 percent are taking home over $250,000 more per year than their peers. The report noted that firms that are more proactive in seeking new clients tend to be among the top 25 percent and that the organizational structure of the firm also plays a key role in the firms’ success.


-- WebCPA staff

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