I must confess I was sceptical when a number of Financial Planners, including employee ownership evangelist Chris Budd, began pushing the idea that employee ownership could be a viable pathway for many Financial Planning firms.

Mr Budd, the chairman of Ovation Finance, has long promoted the so-called ‘John Lewis’ model for Financial Planning firms.

He sees it as an alternative to selling a business to a bigger fish and it's certainly becoming a trend. This week we saw Eldon Financial Planning in the North East become the latest firm week to embrace employee ownership.

I was sceptical because I did not think it would work for many firms but I’ve been proven wrong. It's becoming small but significant trend.

Apart from Ovation Finance, Bristol-based Paradigm Norton, one of the larger Financial Planning firms, has also opted for employee ownership and I know others are considering it. There are now hundreds of employee-owned companies in the UK although still relatively few in financial services.

Most firms are opting for an Employee Ownership Trust (EOT) structure where effectively all the shares in the firm are owned by employees who buy the firm from the previous owner, who may themselves be participating in the trust.

It’s not for everyone but it is most certainly a trend and a welcome one. I think a plethora of different ownership structures is healthy for the Financial Planning profession and a sign of a maturing sector adopting different ownership strategies that suit particular businesses and their strategies.

I do not think it suits every firm. Smaller firms or firms where the owners are near retiring may find that outright sale to a larger entity is smoother and works better. For bigger firms, often at least part owned by private equity these days, there are issues of return on investment for the financial firms that own them.

But in the right circumstance it works and it is becoming something of a trend.

Interestingly, I would say that most of the firms who have gone for employee ownership are the more ‘purist’ Financial Planning firms who embrace strategies such as cashflow modelling, fee-based advice with transparent fees and financial plans, very close relationships with clients and more of a holistic approach to Financial Planning.

Some of these firms were major figures in the days of the much lamented Institute of Financial Planning - now part of the CISI - which encouraged holistic Financial Planning and fee-based advice long before fee-based advice became a regulatory requirement.

So good luck to Eldon and all the other firms adopting this co-operative or ‘partnership’ model. If it works it works. It is certainly a movement to watch.

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days. Follow @FPT_Kevin • If you have not yet registered for Financial Planning Today as a subscriber please do so now. It's free to sign up.