Quilter hits ‘headwinds’ as adviser attrition rates normalise

Quilter hits ‘headwinds’ as adviser attrition rates normalise
Quilter CEO, Paul Feeney

Quilter’s net advice fee revenue shrunk by £1mn in the first half of this year following a repositioning of its advice business in 2021 to ‘adviser productivity’.

Chief executive Paul Feeney acknowledged the “revenue headwinds” in half-year results published today (August 10), which were compounded by a £300mn rise in outflows.

But the company's profit before tax jumped to £182mn, up from the £21mn loss it made this time last year. 

Quilter put the turnaround down to a policyholder tax credit of £145mn, compared to a £48mn tax charge in 2021. The business also managed to reduce base running costs by around £8mn.

The FTSE 250 company has been engaged in a drive to push up adviser productivity in recent years - a move which has seen advisers leave the business.

Feeney said that while this drive led to an expected reduction in the number of advisers, this fall had been "more modest" in 2022 so far and that attrition rates had now normalised.

He said: "We have stepped up our new adviser recruitment and resourcing. Our core focus has delivered a sustained improvement in our adviser productivity, with the Quilter channel gross flows per adviser being stable at £2.4mn despite a more challenging market environment.

"While our work to reshape our advice business is ongoing, we currently expect adviser numbers to stabilise and to resume growth by the end of the year."

The number of restricted financial planners employed by Quilter’s affluent segment has fallen by 127 over the past year, from 1,639 to 1,512.

Meanwhile, the business’ high-net-worth advice arm Quilter Private Client has cut seven restricted financial planners, and its discretionary investment managers have gone up by eight.

Between January and June 2022, Quilter’s assets under management and administration fell by 12 per cent to £98.7bn, down from £111.8bn in December.

Feeney said the environment for new inflows “has become more challenging” over the course of the first half of the year. 

“While we experienced improved persistency in client assets across each of our businesses, the lower level of new sales volumes translated into lower net inflows which were 30 per cent lower at £1.4bn versus £2bn in the comparable period of 2021.”

The main decline in net flows, he said, was recorded in outflows on external third party platforms. Outflows rose to £600mn over the period compared to £300mn this time last year.

Quilter's Investment Platform inflows also fell £200mn, with net inflows reaching £1.6bn compared to £1.8bn last year.

Feeney said clients were stepping back from discretionary investment.

As a result, gross inflows in the first half were 12 per cent lower at £5.9bn, compared to £6.7bn last year.

Advice fee revenues also took a hit with total net fee revenue having fell by £1mn, to £303mn over the six-month period.