Quilter: Net inflows rise as baby boomer wealth transfer looms
Wealth management firm Quilter has bounced back as it braces for an increase in generational wealth transfers as inheritance tax rule changes creep closer.
The wealth manager recorded a three per cent increase in adjusted profit to £100m as well as a one percentage point improvement in its operating margin to 30 per cent after maintaining strong inflows.
The firm reported a net inflow increase of six per cent to £4.3bn, boosting total assets under management and administration (AUMA) by six per cent to £126.3bn.
Core net inflows also increased to £4.5bn, equivalent to eight per cent of opening AUMA.
Revenue grew by two per cent to £337m reflecting higher management fees, partially offset by lower investment revenue generated on shareholder funds.
The company’s affluent arm, which focuses on financial planning and investments, delivered core net inflows of nine per cent.
Its high net worth arm focuses on providing advice to wealthy individuals and recorded net inflows of three per cent.
The company’s simplification program, aimed at increasing profitability, achieved £43m of savings in the first half of the year and is expected to meet its £50m target by the end of 2025.
The interim dividend increased by 18 per cent to 2.0p per share.
Shares rose 3.12 per cent to 169p in early morning trading.
Results slightly exceeded analyst expectations who believe increased productivity should generate “attractive returns on a sustainable basis”.
FCA review
Alongside its results, the company provided an update on its ongoing advice review, with the Financial Conduct Authority investigating if Quilter was delivering all services it was charging for.
A Skilled Person Review, a review conducted on Quilter for the FCA by a third party, was submitted to the FCA in the second quarter.
Discussions are now focused on the implementation of a likely remediation programme, and the initial provision of £76m set aside to cover potential remediation has since been reduced to £70m.
The Group continues to believe this sum remains appropriate.
Baby boomer engagement increased
The wealth management firm is now preparing for a major intergenerational transfer of wealth from baby boomers to the younger generation.
Quilter put the trend down to the increasing complexity of UK personal tax legislation, including the changes to inheritance tax in last year’s Budget, adding adviser-client engagement has risen since the announcement.
CEO Steven Levin told City PM: “People in retirement, especially those who have got wealth to transfer, they need help in terms of planning…and how to structure things around inheritance tax”.
Levin added the need for “sensible investment advice” for those looking to transfer wealth as family members who are likely to inherit.
Quilter has maintained its expectations for the full year.