M&G’s Financial Planning arm M&G Wealth saw net client outflows of £1.4m for the year ending 31 December 2021.

In 2020 the Financial Planning venture saw net positive flows of £0.1m.

M&G said the drop in flows was driven by an increase in drawdowns as retirement products matured, as well as the impact of increased transfers out due to “changes in market dynamics” including a shift to digital following the Coronavirus pandemic.

Despite the drop in flows, M&G Wealth reported an increase in assets under management and adjusted operating profit.

Assets under management and advice increased to £84.2m (2020: £79.5m) over the year.

M&G Wealth reported a £41m adjusted operating profit before tax for 2021, in comparison to the £11m loss reported for 2020.

M&G Wealth attributed the increase in profit to an improvement in the net result from business written in PruFund to £63m (2020: £22m) and a reduction in the losses of its unit-linked business.

M&G said the drop in flows “underscores the importance of broadening the proposition” offered by M&G Wealth.

John Foley, chief executive at M&G, said: “While many customers still want in-person investment advice, we cannot ignore the rapid growth of digital investment services, which now account for almost one in five UK direct customers.

“To capitalise on this growing segment, we have launched a hybrid advice proposition for our advised customers with digital specialist Ignition, and in January 2022 also announced a new partnership with digital investment specialist Moneyfarm. This will provide technology and guidance to support the development of a new M&G Wealth direct digital investment service, and also potentially offer us opportunities to enter the European direct investment market.

“To complete our offering, we have also acquired TCF Investment, a provider of model portfolio services.”

M&G launched its M&G Wealth financial planning business 18 months ago and has made several acquisitions to boost its growth.

It completed the acquisition of Sandringham Financial Partners in January 2022, bringing over £2.5bn in assets under advice.