Whether it’s independent or restricted, Quilter chief executive Paul Feeney describes his company as “the advice champion”.
Speaking to International Adviser after the publication of the group’s half-year results on Monday, he addressed the drop in flows, the impending roll-out of the UK platform and his dislike of one particular industry term.
Independent and restricted
The first half of 2019 saw the group acquire Charles Derby and Lighthouse, both of which added to the group’s stable of restricted financial planners.
A term that is not too popular with Feeney.
“I’ve told the regulator time and time again, I hate it. It’s quality assured advice. If you walk into the supermarket, you don’t see 2,000 jars of jam, there are maybe 10.
“They are quality assured because somebody has made a choice,” he said, adding that Quilter has one of the widest restricted propositions in the market, enabling advises to use the investment solutions and platforms of other industry players.
“We also support independent advice in all of its forms, so long as we know that it is controlled and properly managed. You can’t just rock up in the morning and decide what you’re going to advise on.”
State of play
As reported by IA, Quilter recorded a 90% drop in net flows for the six months ending 30 June 2019, with gross sales down 26%.
While these numbers are significant, Feeney remains sanguine.
“Flows are muted, there is no doubt about that – but at the same time we still did £6bn ($7.3bn, €6.5bn) in the first half, which is about 5% down on the second half of last year.”
He points to two exceptional items at Quilter Cheviot, both of which occurred in the second quarter of this year.
The firm lost 11 of its roughly 165 investment managers in late June/July “and all of their restricted covenants came up at the end of the first quarter, so we’ve seen that money moving with them”.
“We are probably going to see that for another two or three quarters.”
In total, between the investment managers moving and the loss of a £200m mandate, which Quilter had already informed the market about, £800m walked out the door in the second quarter of the year.
“But, overall, £6bn in this market holds up very well with most of our competition. If you look across the market, there have been some exceptional outflows with our competition, which we haven’t seen.
“Also, our profits are up whereas most of our competition reported that profits were down. Revenues are up, our costs are down.”
The company is also focusing on “fewer markets with deeper roots”, which Feeney believes will give “a much stronger foundation from which to grow our international business”.
He also pointed to the sale of Quilter’s heritage books for £425m, “which is 120% of the funds of that business”.
The result will be “much faster growth and a more streamlined UK and international wealth business”.
“Overall, we are pleased. We would love the political and macro environment to be a bit better, but we can’t control that.”
UK platform
Feeney describes Quilter’s strategy during these turbulent times as being “to stay close to our customers”.
“Our job is to protect their assets during this period, where there is probably more downside risk than upside risk right now in the markets.”
He added: “Our advisers have never been busier. Most people are not putting a lot more discretionary money to work in the market right now, but they want advice and our advisers’ diaries are fully booked.”
One development that Feeney is particularly excited about is Quilter’s UK platform, which “is going to make a massive difference to our UK business”.
“We are going through all of our migration testing and the results are fantastic – higher than our expectations. We’re a little bit behind on our functional testing, so we’ve given ourselves a couple more months to get the whole thing done.”
