The Midlands-based company, which has acquired dozens of IFA firms over the past few years, said that with the introduction of Covid-19 restrictions in March its wealth management business “fell below expectations.”
The company did not provide details on the drop in business but said AFH advisers had to come to terms with new ways of working with clients as “uncertainty gripped the markets.”
Earlier in the year, the firm said in its interim results, released on 1 June, that half-year gross inflows continued at a similar level to that of the second half of 2019 and annualised outflows continued at below 2% of opening funds.
The board says EBITDA earnings for the full year is expected to exceed 2019 but full year EBITDA to be “slightly below” its previous expectations.
In its trading statement the group said: “Due to the challenges of remotely interacting with prospective clients, the recovery in new business written by the wealth management division and the associated inflow of new funds has been slower than anticipated and, since May, has remained below pre-Covid-19 levels.”
The company has used the past six months to pay down its debt and the firm said retaining cash remains a “primary focus.”
It repaid £752,000 of 8% Loan Notes in early September and over £3m in deferred consideration since April.
Despite the challenges AFH says it continues to be profitable and was cash generative throughout the summer period.
This month while directors continued to take salary reductions staff returned to full pay.
Most of the firm’s 450 professional advisers and 400 support staff have worked from home during the pandemic and the firm said investments in technology since 2015 have proven “invaluable.”
The company hinted that changes to working practices since lockdown may also become permanent as they may enable greater efficiency in the future.
The acquisitive company is now more focused on organic growth than takeovers, it said, but selective acquisitions have not been ruled out.
AFH was founded in 1990 by chief executive and Chartered Financial Planner Alan Hudson and has over 20,000 clients.