Wealth manager and Financial Planner has reported pre-tax profits up 11% to £233m but AUM down by over £4bn in its maiden results since separating from Old Mutual.

The company said that AUM at £109.3 billion was down 4% year-on-year or over £4bn due to “negative” market performance although positive net flows of £2.7bn helped offset the decline.

There was an improvement in operating profit margin by 1% to 30%. Adjusted profit before tax was £233 million (2017: £209 million).

Net Client Cash Flows declined by 38% to £4.7bn (excluding the closed book Quilter Life Assurance) but the company says client confidence remains strong and is demonstrated by the fact that integrated cash flows were down only 10% despite turbulent market conditions.

An optimisation plan is under way which the group says will ‘transition’ the business to a simpler but higher growth business. It is not clear that the optimisation programme will mean in detail but it will “eliminate inefficiencies in the operating process.”

Paul Feeney, Quilter chief executive, said: “Quilter performed well in 2018 despite increasingly challenging market conditions as the year progressed. We are delighted to report record profit with adjusted profit up 11% and adjusted diluted earnings per share up 15%.

“Although deteriorating investor sentiment over the course of the year made net client cash flows more challenging, the resilience in our integrated flows demonstrated that our business model is generating real traction with our customers.

“2019 will again be an important year for our business. We will substantially implement our new UK Platform, progress our optimisation plans which will help to drive up our operating margin in 2020 and 2021, and we will increase numbers of advisers and investment managers to deliver high quality solutions that our customers need.” 

The group is planning major investment in its new UK Platform, soft launched in February, and will add SIPP capabilities, Junior ISAs and cash accounts to it as well as more investment choices including ETFs and investment trust shares. The aim will be to target a broader and higher net worth customer segment in the UK than Quilter is currently reaching. 

Quilter, which has acquired a number of Financial Planning and IFA firms, will continue to expand its adviser numbers although recent growth has been slightly below target.

It now has 1,621 ‘Restricted Financial Planners’ (RFPs) up 4% on the previous year.

The company said the 4% growth was satisfactory but “below our historic growth rate of 5% and reflects a disappointing rate of growth in the first half and so this was an area of particular focus in the second half of the year when the majority of this growth was achieved.”

The group says further acquisitions are possible. It’s most recent purchase in February was the Charles Derby Group which it part-owned.

The company sees “significant opportunity” from broadening the existing Quilter Private Client Advisers business model into the affluent market instead of solely servicing high net worth clients, it says.

The Quilter Financial Adviser School, launched in 2016, is beginning to provide new advisers. The average student age is 29 years with 33% female participation and during 2018 the 100th student graduated. There are currently 94 students enrolled on courses which cover all stages of financial advice and of these, 46 are potential RFPs, the company says.

The company says it will expand the capacity of the school to deliver more new RFPs to Quilter. The focused RFP programme takes 14 months to complete and should contribute to growth in adviser numbers later this year.