Are we obsessed with growth when profitability should be the focus?

Quality or quantity? It’s an age-old debate. Most of us might argue that quality is far superior – you'd rather invest in one sturdy pair of shoes than buying a cheap replacement every few weeks. This logic also applies to business.

A strong financial advice practice can be measured in various ways, with productivity and funds under management representing key indicators. As such, business owners may feel that the quickest way to increase profit and realise growth is by expanding their workforce. Yet growth encompasses far more than just increasing the size of your team, or the number of your advisers. Profit and output are far more meaningful measures of business success, especially when it comes to delivering excellent client outcomes.

So, how can business owners boost productivity without unnecessary expansion? We spoke to James Bailey, Business Partnering Consultant at St. James’s Place, on how Partners can maximise profit and sustainably grow their financial advice business.

What Does Good Profit Look Like?

Good profit is unique to each business, with ambitions around growth and productivity varying widely. James Bailey shares the key metrics his consultancy team uses to measure good profit: “We look at industry measures such as net and gross profit, EBITDA, cash flow margins, and return on investment. We essentially perform a detailed analysis to see what’s generating the most business activity.”

James also explains that success isn’t just about making the most money; it’s about aligning growth plans with the business life cycle: “If you’re in the early years of establishing your business, it's about generating a profit to reinvest. For those looking to grow, the strategy is different. And for Partners nearing retirement, it’s about identifying what’s currently profitable and focusing on those areas.”

Growth vs Profitability

James suggests that rapid growth in capacity can harm future productivity: “Whilst we have teams of specialists to help our Partners recruit Advisers, and we also have a market-leading Academy training new talent, we don’t want to encourage businesses to bring in new talent without the necessary support infrastructures in place to help them thrive.”

At SJP, Partners receive unparallelled support to help them grow, including developing a powerful marketing strategy, investing in growth, client acquisition, technology integration, and business planning to name a few. This support is delivered by over 2,000 employees supporting over 4,500 advisers, including teams of specialist business coaches who deliver consultancy on operations, technology, succession planning, and leadership development, among other areas.

Building and Clearing the Path

James elaborates on the dual approach SJP takes to support its Partners: “We help our Partners either by 'building the path'—assisting them in creating and executing a long-term strategic plan, or by 'clearing the path'—removing barriers to productivity and profitability. This dual approach ensures that our Partners are not only well-prepared for growth but also capable of maintaining efficient and profitable operations.”

This support helps our business owners be more productive, profitable, and sustainable. For example, we understand that succession planning is one of the key challenges facing advisers today, and we help to remove this risk by creating a clear plan, including support with management buy-in where appropriate. Our professionally qualified consultants work with Practices to deliver and embed change programmes and support the development of back-office teams. The best part? There’s no cost to any of this support. It’s just one of the many benefits SJP Partners receive.

Does FUM Matter?

Traditionally, growing funds under management (FUM) and Adviser numbers has been a strategic priority for most firms. However, profitability is key to long-term success. It's not just about increasing turnover but ensuring that assets generate meaningful returns for both the business and its clients. A successful financial advice Practice is defined not by its size but by its ability to deliver value to clients while maintaining a sustainable and profitable business model.

James concludes, “Ultimately, it's about balancing growth and profitability, ensuring that expansion is driven by a clear vision, business plan, and support team. My advice: challenge yourself and think big! There’s no limit to what you can achieve as a business owner.”