This first quarter of 2020 was something of a mixed bag for Quilter, which reported that assets under management and administration fell to £95.3bn ($118.7bn, €109.3bn) from £103.6bn during the same period a year ago.
While gross sales improved, reaching £3.3bn from £3.1bn a year ago, net inflows were flat at £500m and remain significantly below the £2bn reported in Q1 ’18.
Quilter chief executive Paul Feeney commented: “After a good start to the quarter in terms of flows, revenues and profitability; the global health crisis caused by covid-19 has significantly altered economic and market expectations for the foreseeable future.
“The path and timing of the reversion to a more normal environment remain unclear and we expect this to be reflected in further market volatility.”
Change of plan
Inflows to the UK platform have grown as transfers out to market competitors reduced significantly, the firm said, with March being the strongest month.
But Quilter has had to rethink some operational points due to the effects of covid-19.
The first tranche of advisers and customers migrated onto its newly developed platform in February 2020; but the second round will likely be delayed beyond the end of summer 2020.
Internal pandemic impact
Just like any business, Quilter has had to transition its operations to a remote model to follow governmental guidance on dealing with coronavirus.
“Approximately 98% of Quilter’s staff are now working remotely including over 200 contact centre-based colleagues servicing its UK and International platforms,” the firm said.
“Contingency plans have been implemented through accelerated delivery of IT and remote telephony solutions.”
The advice business has rolled out more digital tools to keep working as smoothly as possible, including digital signatures and online automated processes, which replace the traditional paper-based ones.
Additionally, over half of international interactions are now taking place through its Wealth Internactive digital accounts.
The UK government has rolled out a job retention scheme to help struggling companies, but Quilter said it does not intend to take advantage of any of the government–backed support schemes.
Despite a relatively positive first three months of 2020, the firm said it does not expect to meet its 27% operating margin target this year.
As a result, it is going to reduce group-wide expenditure by around £30m through lower variable compensation, reduced marketing spend, and a series of other short-term initiatives.
Feeney continued: “My priority is to protect our employees, while continuing to serve the customers and advisers who rely upon us.
“With 98% of staff working from home, we have not only provided the technological support required but increased the practical, emotional and mental support available for employees and managers via our existing wellbeing programme, Thrive.
“While lower levels of AuMA will have an impact on revenues, the vast majority of our revenues are recurring by nature.
“We operate in a large market with secular growth potential, people still need to save for their retirement and they need trusted financial advisers to help guide and support them on that journey.
“I am confident we will emerge from this crisis in good shape and even more connected to our customers, our advisers and ourselves,” Feeney added.