Financial Planner and wealth manager Quilter increased pre-tax profit in the first half of the year by 9% to £61m (H1 2021: £56m) despite a sharp fall in Assets Under Management (AUM) as markets tumbled around the world.

The company reported that AUM was £98.7 billion at the end of June, a 12% decrease of 12% from 31 December 2021 (£111.8 billion).

It blamed “adverse market movements of £14.5 billion” for the AUM drop. 

The company believes it has now mostly resolved problems at its acquisition Lighthouse Group.

Quilter said it had concluded negotiations with the insurers who provided professional indemnity cover for Lighthouse which was hit by bad advice claims. This has resulted in the payment of the full amount due under the policy of £15m. Quilter said the net cost of post-acquisition Lighthouse remediation totals £12m.

Despite the challenges the company managed to increase pre-tax profit thanks to stable revenues and cost cutting. It has trimmed back adviser numbers to boost productivity. The firm’s FSCS levy was also lower and the firm said there was a return to more normalised company spending post-pandemic.

The Quilter Investment Platform saw a drop in net inflows of £1.6 billion (H1 2021: £1.8 billion) which the company said was due to an industry wide slowdown in new client flows during the second quarter.

Quilter High Net Worth net inflows rose to £0.5 billion (H1 2021: £0.4 billion). 

There was an increase in net outflows of £0.6 billion (H1 2021: net outflows £0.3 billion) of assets held on third party platforms reflecting, the company said, non-core, legacy business in run off and the transition of assets advised by Quilter Financial Planning on other platforms to the Quilter Investment Platform.

There was an improved operating margin of 20% (H1 2021: 18%) and the interim dividend of 1.2 pence per share was maintained.

During the half year there was expansion of the company’s WealthSelect managed portfolios and 80 IFA firms adopted Quilter as their investment platform. There was also continued investment in the High Net Worth segment with eight more investment managers added since June 2021. 

CEO Paul Feeney said it had been a tough six months but with some positive signs.

He said: “Operating conditions in the first six months of 2022 have been challenging. Global equity markets have experienced one of the worst periods of negative performance in recent years and traditional 60:40 multi-asset portfolios have had their largest negative year-to-date return on record.

“Against this backdrop we delivered a 9% increase in our adjusted profit in the first half of 2022. Our focus remains on managing our business towards the targets set out at our Capital Markets Day last November, although an absence of an improvement in market levels and investor sentiment over the remainder of this year and 2023 may impact on the timing of delivery. 

“My priorities continue to be growth in the IFA and Quilter adviser franchises, cost discipline to deliver a right-sized cost base for the new streamlined Quilter, investing for future growth through initiatives such as hybrid advice, and embedding ESG into the services we provide for clients and tools we provide for advisers.”

After a number of sell offs, the Quilter Business now mainly comprises two segments: Affluent and High Net Worth. Affluent includes the Financial Planning businesses: Quilter Financial Planning, the Quilter investment platform and Quilter Investors, the Multi-asset investment solutions business. High Net Worth includes the discretionary fund management business, Quilter Cheviot, together with Quilter Private Client Advisers.