Nucleus & James Hay fall into red as net inflows tumble

Nucleus & James Hay fall into red as net inflows tumble

Nucleus and James Hay recorded a £22.9mn loss after tax last year, as net inflows plummeted 95 per cent and it shed more than 100 employees.

In results published earlier this week (October 10), the combined platform group said the “primary reason” for the loss was down to the disposal of advice firm Saunderson House.

In 2020, the group’s £57mn profit included the sale of Saunderson House and the IFA's January to August profits which were propped up by £20mn in advice fee revenue.

Article continues after advert

It also cited £7mn and £4mn expenditures relating to transformation and “service recovery” programmes, respectively. The group reported an adjusted profit of £7.9mn, down from £12.1mn.

The results said James Hay experienced an “overall decrease” in revenue compared with Nucleus. The group put this down to changes in administration fees and last year’s lower base rate which reduced clients’ interest margins. 

Revenue for the group fell from £70.5mn in 2020 to £63.6mn in 2021, propped up by asset-based fees but pulled down by dips in annual fees and advisory fees - the latter it no longer charges due to shedding Saunderson House.

Net inflows fell 95 per cent, from £249mn to £11.6mn. Low net inflows have continued into this year. Previously, FTAdviser reported on Nucleus’ inflows, which dropped to £1mn in June.

The number of people employed by the platforms fell by 119, from 846 in 2020 to 727 in 2021. Employees have been leaving Nucleus since its sale to Epiris and James Hay last year.

Since December 2021, FTAdviser has counted the departure of at least 17 directors, heads of department and managers.

FTAdviser understands the 119 figure also includes staff tuped over to FNZ, following the group’s deal with the provider last year to build a new platform set to launch at the backend of this year - though the launch could spill into next year.

This partly explains why staffing expenses dropped considerably last year, from £42.9mn to £28.7mn.

A spokesperson for Nucleus said the headcount reduction in the accounts reflects the outsourcing of operational colleagues to FNZ and the sale of the group’s small, self-administered pension schemes book.

“However this year alone we have added almost 90 new colleagues with significant skills and expertise to our team which now comprises more than 600 people."

On the wider results, a spokesperson added: “These are a complicated set of numbers referring to a period of significant change, including a major acquisition and restructuring to position the company for future growth. 

“With only five months of contribution from Nucleus, we are already making strong progress against our stated strategy to drive scale for investment in technology, product and price. We fully expect this year to reflect the scale benefits of the combined group.”