CompaniesJun 2 2015

‘Safe’ advice strategy leaves Personal Touch profits up

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
‘Safe’ advice strategy leaves Personal Touch profits up

A solid set of annual results for mortgage network Personal Touch Financial Services was made possible by “significant” reductions in the provisions for complaints and commission clawback, down 46 per cent and 30 per cent respectively, as part of a strategy to target “safe profit”.

The 2014 results showed pre-tax profits increasing marginally to £483,176 from £482,895 in 2013, despite turnover falling to £46.6m from £51m the year before.

The network became the first in the industry to introduce member fees directly linked to quality-based criteria, allowing over 80 per cent of members to pay reduced fees in 2015. This came following a year when it confirmed it was reducing member numbers.

The strategy also enabled a collective £250,000 reduction in professional indemnity costs for members.

Earlier this year, several rivals in the space argued that “being boring” was the key to remaining viable as an adviser network.

Risk management led to reduced provision levels for customer complaints and claw-back, with recent Financial Ombudsman Service data showing Personal Touch complaints fell by over half year on year.

A board restructure in 2014 created a smaller more focused executive team, focused on investment in technology, training and adviser development. Max Wright, after three years as chief executive, moved to a non-executive role, while former finance and IT director Jane Cross was promoted to the vacant position.

Ms Cross commented that for the last three years the business has been changed to ensure it remains profitable and secure for the long term.

“A fundamental part of our strategy is de-risking the business to ensure we achieve ‘safe profit’ - this core risk mitigation approach ensures that the profit achieved is sustainable.

“By supporting our members in delivering the very best financial advice to their customers, the volume of complaints and clawbacks has been substantially reduced.”

She added that the wealth landscape is changing dramatically following the at-retirement reforms and that the network is “well positioned with a productive, stable community of advisers who operate largely in hybrid businesses that will be able to offer consumers a range of wealth, mortgage and protection advice”.

Personal Touch is one of the only major privately-held adviser networks, having no provider shareholders and instead being backed by independent investment group, Lloyds Development Capital.

The company had year-end cash reserves of £14.2m and over 2.5 times the capital adequacy requirement set down by the regulator.

peter.walker@ft.com