Quilter H1 2025 Earnings Report

Quilter EPS Results

• Actual EPS: GBX 5.60
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Quilter Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Quilter Announcement Details

• Quarter: H1 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 3:30AM ET

Quilter (LON:QLT) is a leading UK and cross-border full-service wealth management business, whose purpose is to help create prosperity for the generations of today and tomorrow. It has leading positions in one of the world’s largest wealth markets, and its multi-channel proposition and investment performance are delivering attractive growth.

Quilter H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Core net flows reached £4.5 bn in H1, annualizing at £9 bn and driving market-leading inflows across both affluent and high-net-worth segments.
• Positive Sentiment: Operating margin improved to 30%, adjusted profit rose 3% to £100 m, EPS increased 4% to 5.4 p, and the interim dividend was lifted 18% to 2 p.
• Positive Sentiment: The affluent segment delivered net inflows up 132% year-on-year, revenues grew 6%, and adjusted profits climbed 10% amid disciplined cost management.
• Positive Sentiment: Quilter’s platform and Wealth Select MPS remain market leaders by assets and IFA adoption, benefiting from a highly scalable model that boosts share of wallet.
• Positive Sentiment: Simplification and transformation programmes have secured £43 m of run-rate savings to date, with the balance of £50 m+ expected by year-end to support further margin gains.

Presentation

[Steven Levin, CEO & Director at Quilter]

Good morning, and welcome to our results presentation for the 2025. This morning, I will start with our business highlights, our strong flow momentum and the scale of the opportunity ahead. Then I'll spend a bit of time on something that I don't always think is appreciated, the scalability and market leadership of our affluent business. Finally, I'll say a few words on our strategic priorities and my areas of focus to further improve our business. As usual, Mark will then take us through the financials.

[Steven Levin, CEO & Director at Quilter]

Then I will summarize as to why recent policy developments are a positive for Quilta and we'll end with Q and A. We've had a good start to 2025. Profits have increased from a very strong 2024 base and flows are much higher. Let me start with the highlights. Core net flows were much higher, up to $4,500,000,000 That's only $700,000,000 less than we achieved in the whole of 2024.

[Steven Levin, CEO & Director at Quilter]

And flows into both segments were sharply better year on year. Our operating margin, which has improved steadily, is now at 30%, in line with our medium term goal. Adjusted profit increased 3% to GBP 100,000,000. That reflects higher revenues despite a lower contribution from interest on capital and good cost management alongside business investment. Earnings per share increased 4% to 5.4p, and the Board has declared an interim dividend of 2p, an increase of 18%.

[Steven Levin, CEO & Director at Quilter]

Let's drill down a little bit more into the flows. This slide shows gross new business, outflows and net inflow performance for the last three half years. The key points are new business flows have continued to increase in 2025. Outflows have returned to more normal levels as both cost of living pressures and consolidated activity has eased. Note that our outflows include regular income drawdowns as well as surrenders, unlike how some of our peers disclose.

[Steven Levin, CEO & Director at Quilter]

The combination of these has led to the excellent improvement in net flows. And given the momentum of our business, the current levels of flows which annualize to around GBP 9,000,000,000 feel sustainable. And as you can see from this slide, we've outperformed our peers again in the first half. We remain the market leader for net inflows in both our affluent and high net worth segments. So we're doing well.

[Steven Levin, CEO & Director at Quilter]

And as you know, we're operating in attractive markets which benefit from structural growth trends. And everything we've seen recently has reinforced our conviction with three key drivers: first, the complexity of U. K. Tax rules, including recent changes to bring pensions into the inheritance tax net, continues to drive demand for advice from baby boomers who wish to pass on their assets in a tax efficient way. Secondly, The U.

[Steven Levin, CEO & Director at Quilter]

K. Faces a significant retirement funding challenge. As state support diminishes and with future retirees having little or no defined benefit pensions, individuals are going to have to take more personal responsibility for their financial security and retirement. Fundamentally, most people need to invest significantly more. Finally, policymakers and regulators now recognize the scale of the problem.

[Steven Levin, CEO & Director at Quilter]

The focus on targeted support, encouraging long term investments and other recent initiatives is a constructive first step. We now need to see effective implementation to give people the confidence to make long term decisions. Our firm belief is that individuals need to invest in diversified portfolios to build capital over time. That's what Quilter is built to deliver. These growth dynamics provide a positive backdrop for our business.

[Steven Levin, CEO & Director at Quilter]

Let's look at the long term growth trends. As you can see on the left, there's currently about £700,000,000,000 on advised platforms, and there's around £1,000,000,000,000 managed by high net worth firms, including private banks. Independent observers expect U. K. Advised platform assets to increase by around 70% by the 2029 and for high net worth assets to grow about 50% over the same period.

[Steven Levin, CEO & Director at Quilter]

Clearly, attractive growth opportunity. Our Affluence segment is a highly scalable market leader in what is clearly a high growth market. I'll get into those dynamics shortly. Our high net worth business is more relationship focused, so less naturally scalable. However, we see the opportunity to grow by increasing productivity and operating margin, adding larger accounts and gradually increasing advisers and investment managers.

[Steven Levin, CEO & Director at Quilter]

Let me say a few words on the performance of each segment. Affluent had a very strong first half. Net inflows more than doubled, up 132%. That annualizes at 9% of opening balances. Revenue was up 6% and cost discipline offset business investment, giving strong adjusted profit growth of 10.

[Steven Levin, CEO & Director at Quilter]

High net worth had its strongest period for net flows in quite a while. Net inflows were up significantly year on year, equivalent to 3% of opening balances. Revenues were stable, reflecting mix shift and continued investment in the business led to broadly flat first half adjusted profits. Now I'd like to turn to our Affluence segment and say a few words on the scalability and market leadership we enjoy here. First, when it comes to managing assets, platforms with their flexibility and ease of use are the natural custodian for household wealth.

[Steven Levin, CEO & Director at Quilter]

And as the leading advice platform by both flows and assets, with not far off GBP 100,000,000,000 in assets, we enjoy a strong competitive position here. Scale matters. I'm particularly pleased about the strong momentum that our platform has enjoyed over the last year. The chart here shows the progression in gross and net flows by half year over the last eighteen months. The Quilter channel is in green and the IFA channel is in gray.

[Steven Levin, CEO & Director at Quilter]

Increased use of our platform by IFAs means our market share of IFA net flows has been on a sharp upward trajectory since late twenty twenty three, reaching around 30% in Q4 twenty twenty four and Q1 'twenty five. On the right, I've included a quote which gives you a market view from Land Landcat on our platform proposition. It summarizes how strongly our platform performed in 2024, and it's clearly doing even better in 2025. Now we often get asked how independent advisers rate our platform, and this chart sets out some of the data from the recent investment trends report. In each case, Quilter is shown in green.

[Steven Levin, CEO & Director at Quilter]

Far left, you can see the breadth of our independent adviser relationships by primary, secondary and other. Across the market, we enjoy the largest breadth overall, and we lead by a number of primary and secondary relationships. In the middle, you can see how that breadth has evolved over time with substantial improvement over the last two years. That's the result of hard work from our distribution team. Finally, on the right, you can see the evolution of our Net Promoter Scores over the last five years.

[Steven Levin, CEO & Director at Quilter]

This again demonstrates how we've won hearts and minds since the new platform was launched. Basically, our platform enables advisers to deliver for their clients so they like using it and are putting an increasing amount of business with us. So our platform has got great recognition. Our MPS, Wealth Select, is also recognized as a market leader, too. As you know, regulation has encouraged an increasing number of independent advisers to focus on advice and to outsource investment solutions.

[Steven Levin, CEO & Director at Quilter]

Wealth Select meets these needs very well. Its strong performance and competitive price make it attractive to both our own and independent advisers. That's why we've grown AUMA strongly in the last year. As you can see, we've been vying for the number one position with our nearest peer. These figures are at the end of the first quarter and at the June, our AUM had increased to GBP21 billion.

[Steven Levin, CEO & Director at Quilter]

Again, I've also included some independent views which provide a market perception. So our platform, together with WellSelect, provide a very strong combined proposition that few of our peers can match. We believe it's not just the platform per se, but the linkage between our platform and solutions and the scalability of the Quilter model that gives our affluent segment a distinct competitive advantage. Let me explain. In the first half, we attracted gross flows of around $7,600,000,000 onto our platform, a year on year increase of over 36%.

[Steven Levin, CEO & Director at Quilter]

That additional flow can be managed through our existing sales and support teams without a notable increase in costs. Where assets are both on our platform and in our advice based solutions, we believe that delivers a better result for both our customers and for us, too. And in the 2025, billion, or around onethree of the gross platform inflows, went into our solutions. Again, the cost base of our solutions business is largely fixed, so additional flow can be managed without a notable uplift in expenses. The crucial thing to understand is that both the platform and Quilter solutions are highly scalable.

[Steven Levin, CEO & Director at Quilter]

That's why we focus on maximizing the assets in each by using multiple distribution channels. Now let me turn to our three strategic priorities: building distribution, enhancing propositions and being future fit. We've made good progress across the board on all. First, distribution. It's been a good six months here.

[Steven Levin, CEO & Director at Quilter]

We've continued to take market share, and encouragingly, we've increased both the number of advisers and adviser firms in the Quilter channel. So far this year, 63 advisers have graduated from our academy and are starting to build their books. Our high performing Wealth Select MPS is now on five third party platforms. We announced the acquisition of Gillen Markets in Ireland, which adds meaningfully to our high net worth footprint there. Next, propositions.

[Steven Levin, CEO & Director at Quilter]

We are developing a smooth managed fund proposition, which we'll update on in due course. And as you expect, we've been working on a new proposition for targeted support. I'll say more on that later. And on becoming future fit, we've continued to make progress on our simplification and transformation programs as well as investing in other growth initiatives. So you'll sense the momentum in these areas is really moving Quilter forwards year on year.

[Steven Levin, CEO & Director at Quilter]

Finally, before I hand over to Mark, let me say a few words on my near term priorities. We've nearly completed our second simplification program. We've delivered GBP 43,000,000 of run rate savings, with the rest due by year end. And as I mentioned earlier, in the first half, we completed the merger of our advice and investment management businesses within high net worth. Looking forward, there are four key areas that I'm focused on.

[Steven Levin, CEO & Director at Quilter]

First, building the advice business of tomorrow. Our 1,500 or so advisers wrote about £2,500,000,000 of new business in the first '6 months of twenty twenty five, a broadly similar figure to the prior year. Our advice transformation program aims to materially increase adviser productivity to drive client and asset growth to ensure we continue to increase our ability to write new business. Next, we'll continue to invest in new channels to broaden our distribution, including developing a targeted support proposition to support clients earlier in their wealth journey. Turning to high net worth.

[Steven Levin, CEO & Director at Quilter]

Andy McGlone has done a great job of ensuring that we're well placed strategically by repositioning our business to capture more higher value clients. And by moving our advisers into our investment business, we're able to serve clients better and at lower cost. I've tasked Andy's successor, John Goddard, who joins in September, to build on that. I want us to offer fully integrated advice and investment solutions to a wider range of high net worth clients. Finally, we will invest more in our brand.

[Steven Levin, CEO & Director at Quilter]

As you may have seen, Quilter is the title partner for Rugby's Quilter Nation series later this year. That's the start and there's more to follow. Right, with that, let me hand over to Mark.

[Mark Satchel, CFO & Director at Quilter]

Thank you, Stephen, and good morning, everyone. Let me start by echoing Stephen's comment that our business is in great shape. We delivered a strong financial performance in the first six months of the year. Let me give you the three financial points that tell the story of our half year results. We delivered solid growth in net management fees of 5% with overall revenue growth at 2% as a result of lower interest income on shareholder capital.

[Mark Satchel, CFO & Director at Quilter]

Costs were a little higher year on year as I guided you back in March reflecting business investment and higher FSCS levies. But our cost discipline simplification initiatives gave us a percentage point increase in our operating margin which is now up 30% and our balance sheet remains in good shape. Let's get into the detail with my usual analysis of the P and L dynamics. Starting top left, net flows of £4,500,000,000 in the core business were substantially ahead of 2024. Average AUMA was up 11 on last year.

[Mark Satchel, CFO & Director at Quilter]

Now against the year end position of £119,400,000,000 what we've actually seen is a contribution from markets after currency headwinds and positive flows. While the sharp but temporary market decline in April had an impact on our revenues, you can't see that in average AUMA, which is based on month end averages. Top right, you can see revenues grew 2% to £337,000,000 in total despite lower interest rates reducing investment revenue. Costs bottom left were up 2% to £237,000,000 reflecting higher FSCS levies and business investment. As a result, profit increased by 3% to £100,000,000 That gave an operating margin of 30% and we reported adjusted diluted earnings per share of 5.4p, an increase of 4%.

[Mark Satchel, CFO & Director at Quilter]

Now getting into the moving parts, let's start with revenue margins which guidance. On this slide, each chart shows the average revenue margin for the past four half year periods. In high net worth, on the left, the margin was down two basis points on the year end largely reflecting mix and lower clients cash balances. In affluent, the decline in the managed margin largely reflected mix shift with Keryllium active outflows offset by growth in NPS and other solutions. In line with my previous guidance, I expect the managed margin to fluctuate around the low to mid-thirty basis points level with mix being the driver of movements.

[Mark Satchel, CFO & Director at Quilter]

And finally, our platform or administered margin was 23 basis points. The step down on the second half twenty twenty four run rate appears exaggerated here as a result of rounding along with the revenue impact from the April markets decline. Let's now turn to revenues by segment. Our high net worth revenues were stable. Higher average assets were broadly offset by the lower margin with total revenue increasing by 1%.

[Mark Satchel, CFO & Director at Quilter]

In the affluent segment, revenues grew 6%, clearly a good performance. The main contributors were higher net management fees on both administered and managed assets with a lower contribution from investment revenue and advice fees. Let's now turn to costs. As I flagged at the full year, in 2025, we've stepped up business investment. However, I'm pleased to report that we kept cost growth to just 2% while absorbing inflationary pressures and a quarter of higher national insurance rates.

[Mark Satchel, CFO & Director at Quilter]

We reduced base costs marginally as a percentage of revenues, which drove the improvement in the operating margin, while the costs of revenue generating staff and variable compensation remained broadly stable as a percentage of revenues. The waterfall on the right summarizes the main cost changes year on year. Increases came from inflation, higher national insurance and regulatory levies as well as the investments we've made. Reductions principally came from our simplification program, which is on track to complete by the end of the year. In the bar far right, you can see how the overall cost base breaks down by segment.

[Mark Satchel, CFO & Director at Quilter]

Our net worth and affluent segment costs increased by 24% respectively. These reflected inflation and higher regulatory costs coupled with investments in Ireland for high net worth and investments in New Wealth, the Quilter Academy and other initiatives in Affluent. These increases were partially offset by simplification benefits. Looking forward, I previously guided for costs to be around GBP500 million for the year and I believe that will be towards the upper end of my expectations for the Group's total expenses this year. So putting the segment revenues and Group costs together, this slide shows the segmental contribution to group profitability.

[Mark Satchel, CFO & Director at Quilter]

High net worth delivered profit of £24,000,000 broadly in line with the prior year and affluent profit showed a healthy increase of 10% to £79,000,000 The operating margin declined marginally in high net worth but improved by a percentage point in affluent. And as you heard from Stephen, this part of our business is very scalable so there is scope for further improvements here. Now let me turn to the balance sheet. As you'd expect, we've maintained a strong solvency ratio and cash position. The solvency ratio reduced marginally over the period largely due to the impact of bolt on acquisitions.

[Mark Satchel, CFO & Director at Quilter]

In terms of cash, you'll note the level of capital contributions into subsidiaries where we've injected cash to fund M and A deals we've announced and we've capitalized our regulated advice business to cover the potential cost remediation in respect of ongoing advice. On the right, can see we've got around £350,000,000 of cash available after payment of the interim dividend. That leaves us with a good buffer to cover contingencies, liquidity management and business investment while retaining balance sheet optionality. So our balance sheet is in good shape. And as I've already mentioned, we will undertake a full review of our capital requirements and allocation priorities and I expect to update on that with the full year results.

[Mark Satchel, CFO & Director at Quilter]

The board has declared an interim dividend of 2p per share that has been set at a level of one third of the 2024 total dividend. While that is a year on year increase of 18% that largely reflects the low base level for the interim dividend in 2024. So I wouldn't take that increase as an indication of likely full year dividend growth. Before I get to guidance, let me take a step back and highlight the change we've delivered over the last five years since we sold quarter international. Average AUMA was essentially flat for the first half of that timeline as flows were weaker than expected and market levels struggled with low growth and macro factors particularly in 2022.

[Mark Satchel, CFO & Director at Quilter]

Despite that, we have increased both our adjusted profit and operating margin significantly. What has driven that is modest revenue growth combined with cost discipline. Costs have decreased over the period in nominal terms despite the inflationary environment. That cost discipline has allowed us to manage the revenue margin change experienced across the industry as advisors look to reduce total costs clients pay for advice services. Looking forward, we expect the pace of margin deterioration to ease and while I still expect some revenue margin attrition in line with guidance, we will continue to benefit from our integrated model.

[Mark Satchel, CFO & Director at Quilter]

That coupled with a better environment for flows and stock market performance should deliver positive outcomes. And with our simplification programs now drawing to an end, we have significantly realigned the cost profile of our business, making our operational infrastructure simpler and more efficient as we said we would do. While we expect more normal cost growth into next year from inflation and business development, the scalability of the business will deliver improvements in operating margin, so supporting our goal of steady compounding of earnings over time. Let me finish with our usual guidance slide. Our expectation is for the operating environment to remain constructive and guidance across all the other key line items remain largely unchanged.

[Mark Satchel, CFO & Director at Quilter]

And I spoke earlier about cost expectations for the remainder of the year. That includes brand spend and investment in the business, which we anticipate will increase in the second half. I currently expect these increases in costs to largely offset the higher revenue contributions from our net flow momentum in markets. As a result, we currently anticipate the second half adjusted profit will be broadly equivalent to the first half outturn. And with that, let me hand back to Stephen.

[Steven Levin, CEO & Director at Quilter]

Thanks, Mark. Right, before I conclude, let me pick up on just how well suited we are to the evolving policy environment that I discussed earlier. First, the ever increasing complexity in UK tax law and especially recent changes to inheritance tax for pensions has increased the number of people who need personalized advice. Second, the evolution towards encouraging a better investment mindset is clearly welcomed. Individuals do need to be encouraged to invest more for retirement, and confidence in the stability of the fiscal environment is key to getting them to commit for the longer term.

[Steven Levin, CEO & Director at Quilter]

And both these strongly underpin demand for the services that we provide. And finally, there is now potentially a new growth opportunity emerging from the advice guidance boundary review, targeted support. This is a way of bridging the advice gap and helping people who need but don't currently access to financial advice or guidance. This is an interesting long term opportunity for us as we've clearly got the capability and the scale to provide an integrated proposition to meet client needs here. So to conclude, we are really pleased with our start to 2025, with strong flow momentum in revenues and profit continuing to move in the right direction.

[Steven Levin, CEO & Director at Quilter]

The three messages I'd like to leave you with are: we operate in a large, fragmented and growing market, helping us deliver sustainable growth our propositions and the breadth of our distribution are both market leading, and they're delivering strong inflows And our Platform and Solutions businesses allow us to generate scale efficiencies and operating margin progression. That's why we're confident in our prospects and why we expect to deliver a steady compounding of earnings over the medium term. Right, let's open up for questions.

[Operator]

We'll go to questions, and I think we're going go to the phones first. I think for the first was Andrew Sinclair from Bank of America Merrill Lynch.

[Andrew Sinclair, Managing Director at Bank of America]

Hi, guys. Hope you can hear me. So first, it's great to see momentum building in the adviser headcount and the academy generating recruits. There's been a few comments about moving the advice business to completely restricted operations. Just can you give us a little bit of an idea of how many independent advisers you have remaining today?

[Andrew Sinclair, Managing Director at Bank of America]

And maybe just a little bit of color in terms of how retention rates have been evolving for advisers? So that's the first question. Second, well done, Mark, beat on costs again. Just really if you can give us a little bit more color in terms of how much there is still to be done on costs. You're now at a 30% operating margin and with hopefully revenues accelerating, just where do we think we can go from here?

[Andrew Sinclair, Managing Director at Bank of America]

And third was just on the flow mix within the platform. You mentioned that there's been the noise around pensions. What are you seeing in terms of mix of flows between different products, I guess, for both gross inflows and retention? Just any color you can give us there would be great. Thank you very much.

[Steven Levin, CEO & Director at Quilter]

Thanks, Andy. So I'll take the first and the third question. I'll let Mark pick up the second question. So on advisor headcount, yes, as you see, we have increased our advisor headcount both through recruitment and through people coming through our academy, which we're very pleased about. In terms of the number of independent advisers, they're not included, first of all, in our the adviser numbers that we give out.

[Steven Levin, CEO & Director at Quilter]

The adviser numbers we give out are only the restricted financial planners. We have a very small number of IFAs and we haven't actually recruited new IFAs for at least the last five years. So this is a very small number of IFAs. I don't think it's material sort of either way on that point, Andy. But they're not included in the numbers at all at the moment and any of those that moved to restricted will be additions.

[Steven Levin, CEO & Director at Quilter]

Then in terms of the third question about the flow mix, what we've seen is we have seen a small increase in new cash investments and that generally is not the pension side. So we've been doing very well in insured bonds and because in the first half it's always ISO season, so there's been a bit more mix of ISO in the first half than they sort of was in the second half last year as I think you would expect in terms of flows. But our pensions business remains sort of incredibly strong. But what we have started to notice is a small increase or shift in mix I suppose in terms of new cash versus transfers. And that's something that we think is going to continue and we've sort of talked about before about the very significant amount of cash sitting in the system that needs to be invested and we're seeing the starts of that now.

[Mark Satchel, CFO & Director at Quilter]

Andy, just on your two

[Andrew Sinclair, Managing Director at Bank of America]

Just on that, just on that, Stephen, sorry, Just can you give us an idea of roughly what the mix is today of cash versus new transfers for pensions?

[Steven Levin, CEO & Director at Quilter]

The mix of cash is about cash investments are about 45% and transfers about 55%. And that's up a bit from sixty-forty to 50 five-forty five vessel ratios.

[Mark Satchel, CFO & Director at Quilter]

Andy, just on your costs, I mean, I think we've maintained very good cost discipline and I think we've sort of proven that as a track record now for a good number of years. If you remember back when we were selling businesses and we had stranded costs and everything, we had an optimization program that took out 60 odd million pounds We then had simplification phase one that was £50 and we announced simplification phase two, which is another 50,000,000 So in total, when we threw all of this, it's about £150,000,000 of costs that have taken out with different baseline measures and stuff like that, but in broad terms. £43,000,000 on a run rate basis through the last 50,000,000 We've got another £7,000,000 to go, which I'm pretty confident we'll achieve by the end of this year. And at the full year results and actually I think in the slide deck in the appendices, we've kind of put together there the of the way that we look at the business model going forward. And on the expense side, I'm expecting sort of going into 2026, 2027 etcetera that the cost profile of the business more or less will be an increase of inflation plus a few percentage points to reflect ongoing investment within the business.

[Mark Satchel, CFO & Director at Quilter]

But cost discipline will continue to be something that's maintained. And obviously, some of that will also be influenced by what's going on in the revenue side and the macro picture and how market performance, etcetera, is developing too.

[Operator]

Okay. We'll go to the next question please. The next question comes from Ben Bathurst at RBC.

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

Morning. Hopefully you can hear me okay. I've got questions in two areas, if I may. Starting on high net worth. Stephen, you referenced moving from being principally investment led in that area to offering a more integrated wealth solution.

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

Do you think you'll need more adviser capacity in order to deliver that? And on that subject Bert, can you just give us some more color on the starting point there in terms of the percentage of flows into high net worth assets currently that are fully integrated, I. E, relate to advice and investment? And then the second area is just on the capital requirements review for Mark. How broad are the terms of reference to that review?

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

There has been a long term debate as to whether being part of the Solvency II regime is really suitable for the group, given so much of your business is uncovered or not insurance business. Are you planning to tackle that question as part of this review? Or is that one still for the longer term? Thank you.

[Steven Levin, CEO & Director at Quilter]

Thanks, Ben. So on the first question, high net worth, yes, we do see the benefits of integrated solutions, basically advice and financial planning together, and that is a focus. So we are increasing the number of advisers. And our plan, as I've said, is to increase the number of advisers and the number of investment managers we have over time. But we do actually have capacity at this point in terms of the number of advisers that we currently have.

[Steven Levin, CEO & Director at Quilter]

The details on the exact splits, we don't we haven't actually disclosed that, so I'm not going give any numbers now. But remember, so a lot of the business that we get is via IFAs. So the client is getting an integrated advice and investment management solution. What we're doing is we're adding our own advisors as well. So we will have the options of doing business in multiple different ways in our high net worth business and that is a key part of our future growth opportunity future growth opportunity there. Mark, do want take the next Yes.

[Mark Satchel, CFO & Director at Quilter]

Ben, look, the capital review in sort of if I just take a step back will be pretty comprehensive in terms of what you're doing. You had a specific question just around Solvency II there. I have had discussions with both regulators about the regulatory regime in the past, in the recent fairly recent past actually. The issue that I think the industry has more generally is that in order for us to come out of the Solvency II regime on an ongoing basis, so in other words, that I've got the certainty that we will actually be out of it because waivers can be provided, but they're normally temporary in nature and then you've to reapply, which frankly doesn't help me at all in the longer term capital planning because you kind of want it to be permanent and uncertainty around it, is that it would actually require rewrite of the solvency regulations in The U. K.

[Mark Satchel, CFO & Director at Quilter]

In order for us to come out of it. On every one of the metrics or virtually every one of the metrics that are measured in order to determine whether a company should be Solvency II regulated or not. We are firmly within the metric that suggests or that says that we are forced into Solvency II regulation. So there's actually sort of not a you're actually looking at the regulator regulator applying dispensation. As I say, if that dispensation can't be provided irrevocably, it doesn't really provide sort of sufficient certainty to sort of go ahead with anything on a or any sort of long term planning.

[Mark Satchel, CFO & Director at Quilter]

So that's where we are. I'm sure I'll probably have those discussions again, but bluntly, I'm not I can't speak for the regulators, but not necessarily expecting a different outcome to come about as a consequence of that.

[Steven Levin, CEO & Director at Quilter]

Thank you, Mark.

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

Thank you, Phil.

[Operator]

Okay. The next question comes from Enrico Bolzoni at JPMorgan. Please go ahead, Enrico.

[Enrico Bolzoni, ED - Equity Research Analyst at J.P. Morgan]

Hi, good morning all and thank you for taking my questions. So I would like to go back once more to the iNet order. So a very nice uptick in net flows. Can you give us maybe some extra color on how you plan to accelerate further growth in this division? I'm just trying to understand if you think that growth will come more from, for example, onboarding new customers or winning more share of wallet with the existing ones.

[Enrico Bolzoni, ED - Equity Research Analyst at J.P. Morgan]

Any color there would be helpful also because it's the highest margin division within the business. And then I also wanted to ask you a bit about your advice transformation program that you say will hopefully increase by the productivity and generally speaking you say that advisors should be able to service more clients. So can you help us with some color on in practical terms what are you doing to increase the productivity of advisors? And also you say that it will take a couple of years for this program to be rolled out. Are we going to see some of the benefits earlier than that or we need to wait a couple of years before that is reflected inflows? Thanks.

[Steven Levin, CEO & Director at Quilter]

Thank you, Enrique. So on the first question in terms of high net worth, yes, we're pleased with the improvement we've seen in inflows, but we think there's still scope to grow that business further. In terms of growth initiatives, we've got actually multiple initiatives underway. We expect to see new customers coming from our advice part of the business. We have opened up some new channels, which we call professional connections.

[Steven Levin, CEO & Director at Quilter]

So those are things like Court of Protection, which is a specialist area when people get settlements out of court cases and things like that and they need to manage them as an income for life. There are things involving partners of accounting firms that have got very significant investment restrictions, things like that. We're building out business to deal with that and those are going quite well. We have got a focus on charities and other things. There's significant number of channels that we are focused on.

[Steven Levin, CEO & Director at Quilter]

And to your real question, I think, there's a mix of new money from existing customers and obviously taking on new customers. We're trying to shift our business a little bit more high net worth. So to get some of the we do have some smaller accounts that we're in the process. We've talked about shifting into NPS solutions, which we think will be better for the customers and will free up time and capacity of our investor managers to take on new clients. So those are the initiatives we have underway to drive flow growth in our high net worth business.

[Steven Levin, CEO & Director at Quilter]

On your second question on the advice transformation program, advisor productivity, We have got initiatives underway in short term and that will deliver improvements in productivity and we have done that. But the more significant changes will come with the completion of the program, which will involve rolling out new technology for the advisors to use. And specifically, the work here is about taking time out of the advice process, automating parts, removing rekeying, removing a whole lot of inefficiencies because advisors and the average advisor spends about 25% of their time in front of clients and about 75% of their time on administration, back office, preparing for meetings, etcetera. And if we can reduce that 75% of the time through better technology, which we absolutely know we can, that can make a meaningful improvement in advisor productivity. So that is what's going to be coming with the completion of our advisor transformation program.

[Steven Levin, CEO & Director at Quilter]

And that part is we have said, is a few years away, it's probably still a couple of years off, because we are going to be putting in place an entirely new solution for advisors to use, which will be a lot more streamlined. But we do have, as I said, we do have some benefits coming in between because we are trying to make sure that we continue to deliver small changes until we do the larger scale improvements in a couple of years' time.

[Enrico Bolzoni, ED - Equity Research Analyst at J.P. Morgan]

Thank you.

[Operator]

Okay. The next question on the call comes from David McCann at Deutsche Numis. Go ahead, David.

[David McCann, Director - Equity Research Analyst at Deutsche Numis]

Yeah. Good morning, everyone. Thanks for taking my questions. Three for me as well please. So firstly on the revenue margins coming back to that Mark you did say that they were sort of broad in line with your guidance, but I mean it did look like it dropped sort of two basis points in all three of the areas versus the second half of last year and a bit more than actually sort of year on year.

[David McCann, Director - Equity Research Analyst at Deutsche Numis]

You did give some color earlier in the remarks, but particularly in the administered part. What's caused us to slip more than sort of the one bp per annum? And you touched on the outlook for the second half being not quite as pronounced as that. Can you just give a little bit more color on that? So what's really driven that number down is what I just really wanted color on please.

[David McCann, Director - Equity Research Analyst at Deutsche Numis]

The second question would probably relate to this. At the full year stage you guided to the adjusted operating profit growing probably mid to high single digits percent now implicitly in the second half guidance. You look now I guess talking about more like low single digits percent. Obviously markets are a bit higher overall since then. The costs look similar at £500,000,000 if anything maybe a touch lower than you were talking about the full year.

[David McCann, Director - Equity Research Analyst at Deutsche Numis]

So what's really Is it just this revenue margin being a bit lower? Or is there something else to consider? And then finally, you'll note that Peer obviously did reduce substantially their provisions for the ongoing advisory address. You've obviously kept yours flat.

[David McCann, Director - Equity Research Analyst at Deutsche Numis]

Now I appreciate not completely like for like here. You set yours sometime later. You're obviously a little bit less advanced in the process. But they did cite both their experience and updated regulatory guidance. I'm just curious as to why there is no read across a positive sense to you.

[David McCann, Director - Equity Research Analyst at Deutsche Numis]

So I guess why have you did you not feel the need to do something similar with the provision? That would be great. Thank you.

[Mark Satchel, CFO & Director at Quilter]

Okay. Thanks, David. Well, maybe if I just start with the last one first in terms of the provision. We were we'd already had the FCA announcements and some of the public statements that they'd made around the approach to be made on ongoing advice charges and the skilled person review to take into consideration. We set our provision earlier this year.

[Mark Satchel, CFO & Director at Quilter]

So we were sort of at a different point. Mean, we had a year's benefit in terms of that cycle in comparison to some of peer groups. We still we still need to actually sort of comprehensively sort of get confirmation agreement whatever from the regulator that the approach that we take into remediation is acceptable, whatever you want to call it, by them. So we're still sort of going through that process with them. I'm not expecting anything untoward to come out of it.

[Mark Satchel, CFO & Director at Quilter]

I'm actually thinking or expecting that what we basis on which we originally provided is going to be the remediation program broadly that will be followed going forward. So as a consequence of that, there hasn't been any change in our expectation of the provision requirements. So we still believe that the current provision remains appropriate. You'd have seen at the start of the year just to make sure that everyone is on the page because I think we had some other questions around this. The provision on a discounted basis was $76,000,000 at the start of the year.

[Mark Satchel, CFO & Director at Quilter]

We've utilized $7,000,000 of that in terms of our internal costs of setup and then there's been an unwind of the discount rate of £1,000,000 which gets you back to £70,000,000 So we haven't actually reduced the provision or anything like that. The provision remains as we'd previously set it and we still believe that to be appropriate. On the revenue margins and on administered assets in particular, David, in rounded terms, it's like 1.6 or 1.7 or whatever basis point decline just given how the rounding works from one period to another. I think probably the two things in there that are maybe causing it to sort of maybe be a little bit higher than the rounded one point zero. One is clients tearing where more clients have moved into the tearing brackets that result in slightly lower overall charge for the client.

[Mark Satchel, CFO & Director at Quilter]

And the other is the growth within our own advisors clients going on the platform. Those clients do benefit from the lowest rates generally that are charged on the platform or that we charge clients on the platform and the proportion of those have improved a little bit. So that's kind of there's a little bit of a nuance amongst those things that's driving some of that. And then you also spoke about the adjusted profit mid to high single digit and question around revenue margin. The other thing that I'd probably just add to the points that you made on adjusted profit for this year, also expect interest rate reductions to sort of start to come into effect later what start they've already started, but to continue into the second half of this year and into next year.

[Mark Satchel, CFO & Director at Quilter]

So some of those will also sort of have an impact on the overall plus we've got a bit more investment in the business in some of the other initiatives that we've spoken about. The brand building, we're going to have a full year cost of some of the acquisitions that have been made, the new wealth proposition. We're to be investing a bit more in the Advisor Academy as that scale starts to ramp up. We still don't I mean, I've previously spoken it's going to take sort of two to three years for that to sort of get into the full cost cycle. So I'm expecting a couple of million more from that probably coming through in the second half.

[Mark Satchel, CFO & Director at Quilter]

It's really sort of taken a collection of a lot of those things together, which is what's driving that guidance for the second half of this year. But in the medium term, I mean, we did set out at the full year our expectations of how you should think about the business model, 5% asset growth, 5% NCF, 10% increase in average assets, a bit of margin attrition that might mean revenue growth comes down to around 8%, costs cost inflation plus a few percentage points, so that might be 4% or 5% cost growth, 8% revenue growth less the 4% or 5% cost growth is giving 3% or 4% profit growth. At 3% or 4% profit growth in terms of its actual profit increases translates into something that's sort of 10% plus. I mean that's the broad math of it and that I think still holds.

[Operator]

Okay. If there's nothing else David, we'll move to the next question on the line which is from Greg Simpson at Exane BNP. Go ahead Greg.

[Gregory Simpson, Equity Research Analyst at Exane BNP Paribas]

Hi, morning. Thanks for the presentation. Some good exhibits in there. Three from my end. Firstly, pace of flows has been really impressive.

[Gregory Simpson, Equity Research Analyst at Exane BNP Paribas]

Can you talk a bit about what the mood around advisers and clients is heading into H2? Do you think this kind of 7%, 8% net flow rate could be sustained? Second question is just with the strong growth in NPS, how does the incremental margin on flows here compared to the 35 basis point margin on slide 20 for Managed Solutions in total? And then thirdly, with targeted support, could you maybe share some thoughts on whether it's a risk at all in terms of banks, insurers, B2C platforms being better able to retain clients who may historically have left to get some advice once their financial situation gets more complex? Thank you.

[Steven Levin, CEO & Director at Quilter]

Thanks, Greg. So in terms of flows and the mood out there, we are actually pretty positive. We are we're seeing continued good flows into this quarter. Clients are definitely investing more. The sentiment and focus towards the need for advice and investing is good.

[Steven Levin, CEO & Director at Quilter]

That's we're pretty pleased about. And as we said, we're comfortable that the second half should be reflective of the first half. We sort of said we can sort of see a 9,000,000,000 flow number for the full year, for example. So the mood is positive. The second question on the MPS incremental margins, I don't know maybe Mark, do you want to comment on that one?

[Mark Satchel, CFO & Director at Quilter]

If you go to Slide 37 in the appendices, we've actually sort of set out today generally the revenue margin that we retain. So after we've paid away the cost of manufacture to third party fund managers, etcetera, for Keryllium Active, for Keryllium Blend and Passive, which is a range depending on which one you're in, as well as Wealth Select Active and Wealth Select Blend. So you can kind of see the difference over there. So what we retain on Keryllium Active is roughly 65 basis points at the one extreme. What we retain on, say, Keryllium Passive is more than 25 bps.

[Mark Satchel, CFO & Director at Quilter]

And then there's quite a few sort of variations within that. And the experience that we asked and from the slide also, you can kind of see how the funds invested in Keryllium Active have been declining over the last few years And the growth that we've seen within the managed portfolio solutions of Wealth Select and others have been increasing, as well as how Keryllium Blend and Passive have also increased over the period. So the actual assets that are also the asset transfer that's happening is predominantly from Keryllium Active into the Keryllium Blend passive or into the Wealth Select predominantly Blend range, actually, that is proving to be more popular with advisers and the clients. And you can get a sense of the relative revenue margin contribution that each of those ranges make from Slide 37.

[Steven Levin, CEO & Director at Quilter]

Thank you, Mark. And then going to your last question on the risk of targeted support. We see targeted support as a great opportunity. There are obviously it can be a scenario that lots of companies choose to participate in. I think it's not typically the area where clients who are getting advice are going to end up not getting advice and getting targeted support.

[Steven Levin, CEO & Director at Quilter]

We're finding that clients who need advice have got larger investment amounts and advisors are taking them on. The targeted support solutions, I think, are going to be at more simpler needs. They are definitely not going to be able to provide the holistic advice. So I'm not concerned that there's going to be a sort of material cannibalization from one to the other and certainly not in your point about sort of clients getting targeted support at a bank and not getting full financial advice. But in terms of the upside from targeted support, there's a huge advice gap or support gap in the country.

[Steven Levin, CEO & Director at Quilter]

There are only 4,000,000 people who are getting advice and that and so the number quoted often is only eight or 9% of the population gets advice. So there's a huge number of people who actually, the reality is when you look at the stats, they've got money sitting in cash. That's what they have. There's this sort of £400,000,000,000 of excess cash deposits above the long term averages, that sort of number. Those are the people that targeted sport will really help.

[Steven Levin, CEO & Director at Quilter]

And there is an opportunity for many people across the value chain. But what is critically important about one of Quilter's USPs is that in a targeted sport journey, you have to design a journey such that if targeted sport is not appropriate for that client, you're asking questions and you realize targeted sports not appropriate, you have to give them an opt out, you have to stop the journey. And actually those journeys generally are where the clients got more complex needs and needs advice and Quilter is incredibly well positioned there because we have the scale of our own advice business where we can transfer those clients into a fully advised solution then. So they may want to start talking to support and realize actually their needs are more complex. So that is something that very few companies the market have in terms of the scale of the number of advisers that we have.

[Gregory Simpson, Equity Research Analyst at Exane BNP Paribas]

Very helpful. Thank you.

[Operator]

Okay. I think that's it on the call. We'll go to the webcast. But at the moment, there are two questions. The first from Mike Christalis at UBS, who asks, your guidance for 4% to 5% net inflow looks low relative to the last twelve months.

[Operator]

Where do you see the downside from the current 7% in the medium term?

[Steven Levin, CEO & Director at Quilter]

Thanks, Mike. So the guidance we've given is guidance through the cycle. We're clearly doing a lot better than that at the moment. And obviously, want to continue that. But there is volatility that can be in sort of markets.

[Steven Levin, CEO & Director at Quilter]

We've decided it's not appropriate for us to revise the guidance and to bounce it up and things like that. At this point, I mean, you can obviously make your own forecast. As we've said, we've given our view that we're pretty confident that flow rates are going to continue at this level for the rest of the year. Obviously also as what I don't want to be doing is changing the guidance continuously If market as market level moves as our flows in pound terms get bigger and bigger, AUM gets bigger and bigger, I don't want to be sort of having to guide or adjust the guidance all the time. We've just said it's 5% through the cycle.

[Steven Levin, CEO & Director at Quilter]

We've delivered that. We've delivered well above that. And we will continue to try to deliver well above that. And actually, the real measure, I suppose, for us is how we're doing relative to our peers and relative to our competitors. And actually, probably the best measure for us is market share and relative performance to peers.

[Steven Levin, CEO & Director at Quilter]

And as you've seen, we've done phenomenally well on that basis. And that's actually the thing that we focus on a lot.

[Operator]

And the final question at the moment on the web is from Rahim at Investec, who asked, can you elaborate a little on the momentum in the MPS offering and whether you see any material benefit from the shift to offering it on third party platforms? What do you believe is a normalized rate of growth going forward? And do you believe there's cap to your share in this market?

[Steven Levin, CEO & Director at Quilter]

Thanks, Shereem. The MPS on third party platforms is a relatively new initiative. We've got it on five platforms now, but they've only been added over the last year really and it takes time to build up support. We're seeing some nice support coming through from advisors. In the medium term, we expect that to be a really good source of flow and additional assets under management for us.

[Steven Levin, CEO & Director at Quilter]

But at this stage, is just in its infancy still. And we'll continue to add more platforms and build out that support. The momentum remains strong. I think it has become a market where MPS is the dominant solution that advisors want for their clients and you've seen that. And we've got a phenomenal MPS range.

[Steven Levin, CEO & Director at Quilter]

Wealth Select has got 56 different investment options with different flavors. So we really cater to the full range of solutions. And we've also got a strong NPS offering in our high net worth business. So we've got a great proposition and the momentum is good.

[Operator]

I think that's it in terms of questions from the web. There's nothing else on the line. Just have a last check. No, I think that's it then.

[Steven Levin, CEO & Director at Quilter]

Thank you, everyone, and we will talk to you again in our full year results in March. Thank you.

Participants

Executives

• Steven Levin, CEO & Director
• Mark Satchel, CFO & Director

Analysts

• Andrew Sinclair, Managing Director at Bank of America
• Ben Bathurst, Equity Research Analyst at RBC Capital Markets
• Enrico Bolzoni, ED - Equity Research Analyst at J.P. Morgan
• David McCann, Director - Equity Research Analyst at Deutsche Numis
• Gregory Simpson, Equity Research Analyst at Exane BNP Paribas