Investors Capital posted annual net income of $320,000 for the fiscal year ended March 31, 2010, vs. a net loss of $1.83 million a year earlier. Adjusted earnings were $1.48 million compared to a $260,000 loss in the prior fiscal year.
The turnaround, achieved despite a market-driven 3.0% decline in overall revenue, was aided by a 6.4% increase in advisory revenue and a 21.4% decrease in operating expenses, according to a press release.
The jump in advisory revenues reflects the fact that assets under management have risen through March 31, surpassing the $1 billion level, according to the company.
"We see net capital violations and firms growing too fast by sacrificing quality for quantity," said Timothy B. Murphy, president and CEO of Investors Capital Holdings, said in a statement. "Our strategy of controlled growth, prudent management of expenses, and long-term vision to maximize operational efficiency has enabled us to thrive during the recent market disruption."
Recent cost-cutting measures include a 40.3% decline in advertising and other communications expenses, a 39.2% decrease in regulatory, legal and professional expenses, and a 12.3% drop in compensation and benefits.
As a result of these cuts, the company says, it posted operating income of $860,000 in the fiscal 2010 vs. an operating loss of $2.17 million in fiscal 2009.
Investors Capital "continues to benefit from improving overall quality of its registered representatives, a key component of its strategy for achieving growth in revenues and net income," it said in a statement.
Some 550 independent advisors as affiliated with its broker/dealer, and an average of roughly $1.8 million in assets under management (AUM) per rep.
In terms of recruiting, it has to go head to head with larger firms, such as LPL Financial with 12,000-plus independent advisors.
"The firm strives continually to improve the quality of its representatives by helping them grow their practices, terminating representatives with low-production or quality of services, and recruiting more established, higher-quality representatives," Investors Capital said in a press release.
Thanks to these and other efforts, the firm's average revenue per representative rose to
$137,961 for FY 2010, an increase of 12.1% compared to FY 2009.
In addition, newly recruited advisors had an average trailing 12-month gross production of $254,052, compared with $247,742 for FY 2009, and $217,717 for FY 2008.
"If we continue to do what we do best, live our brand, and provide our representatives with five-star service every day, we put ourselves in the best possible position to recruit higher-end advisors and drive consistent growth for many years to come," Murphy added.
The broker/dealer hosted its first national conference for female advisors last month in Boston.