James Hay parent IFG had planned to dispose of Saunderson House but decided to retain the business instead in April.
The uncertainty hit Saunderson House’s figures, according to half year IFG results out today.
Revenue at Saunderson House for the six months to 30 June 2018 rose year on year from £16.2m to £17.1m but operating profit fell from £3.9m to £1.9m as the cost of staff retention schemes and other costs hits profits after the sell off was abandoned.
On the positive side assets under advice at Saunderson grew from £4.9bn to £5.1bn and the total number of clients grew from 2,056 to 2,263 although the number of new clients signed up during the period was down from 144 in the same period in 2017 to 134.
In its business review, IFG said: “The first quarter of 2018 saw an element of distraction relating to a potential sale of Saunderson House. While the process may have had some impact on conversion of new clients, the clarity provided by the cancellation of the sale process has removed uncertainty for staff and clients and, consequently, the business has continued to perform well.
“Adjusted Operating Profit has fallen by 13% to £3.4m due to significant investments made in the business, including in our portfolio management system, the need to respond to competitive market pressures on remuneration for professional staff following an independent review of market compensation benchmarks and an increase in premises costs following the relocation in Q1 2018 announced at the year end.”
“Operating Profit is further reduced due to the previously announced £1.5m of exceptional retention payments paid to staff in H1 2018. A further £1.5m is expected to be paid in early 2019, provided certain performance conditions are met.”
The company said it would soon start a “remediation process for the small number of (Saunderson House) clients impacted by the legacy issue identified in 2017 in relation to historical pension transfers.”
IFG’s James Hay Sipp and platform business had a good half year with ‘robust’ performance.
Total IFG assets under administration and advice were up 8% in the last 12 months to £31.3 billion (30 June 2017: £29.1 billion), primarily driven by growth in James Hay's MiPlan.
James Hay added 2,469 new Self-Invested Personal Pension 'SIPP' clients during H1 2018, down 20% on H1 2017, driven largely by the slow-down in the defined benefit transfer market.
James Hay has also set aside £500,000 in relation to “potential sanction charges and customer detriment during H1 2018” for legacy matters related to James Hay. Client investments in Elysian Fuels, a bio-tech investment, continue to dog the company.