AFH Independent Fin Services  

AFH funds increase 68%

AFH funds increase 68%

AFH Financial Group has announced a 68 per cent jump in funds under management, confirming a number of further acquisitions in the pipeline and reiterating its commitment to providing an exit for retiring IFAs in the market. 

In its half-year report for the period ending April 30 published today (May 28) the advice consolidator reported funds under management of £5.4bn, up from £3.2bn in the first half of 2018, and a 61 per cent increase in revenues to £36.6m.

AFH reported a pre-tax profit of almost £6m for the six months to April, up from £3.2m in the six months to April 2018, despite "turbulence in the equity markets and subdued investor confidence" over the period. 

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Alan Hudson, chief executive of AFH, said the fall in the markets witnessed in the first quarter of the group's financial year was "cushioned" for clients by the investment strategy of AFH's funds. 

He said: "The strategy of the company continues to focus on generating long term value for shareholders by providing exceptional value and service to our clients and using our increasing size to drive down third party charges aligned to an appropriate risk based investment model. 

"In FY18 we demonstrated the benefits of this strategy to our clients by introducing segregated mandates for our investment proposition, bringing institutional pricing to our clients, and in July 2018 announcing that our AFH Direct clients would no longer pay platform fees.

"Both initiatives have been delivered with the result that total fees paid by our clients using these services have been reduced."

Mr Hudson said he believes this was the "most suitable" model for the future of the sector and in line with the "current objectives" of the regulator.

He added: "We expect that this will continue to be an area of focus as we continue to grow and will emphasise our USP to both clients and to potential vendors, within the objective of accelerating our future rate of growth."

The group's chief executive said the market for acquisitions in the IFA sector had been "buoyant", with the advice consolidator completing four deals during the six month period, for an initial consideration of £7.9m, and absorbing those clients and advisers into the AFH model. 

Mr Hudson said this was despite "some upward pressure" on prices seen in larger businesses where competition from private equity and product providers has increased. 

He added: "Due to the number and size of acquisitions completed in the second half of 2018, regulatory approval and the subsequent business integration has taken longer than in previous periods.

"As a result, the level of new business written and ongoing management fees from these larger acquisitions was delayed during the period.

"These acquisitions have now been transitioned in line with our internal processes and this new business and recurring revenue is expected to accelerate during the second half of the current financial year." 

AFH confirmed a number of opportunities in its pipeline, with its board expected to announce "strategic and tactical" acquisitions in the future.