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Quilter sales fall in third quarter as outflows continue

The wealth management group has seen a 9% increase in total assets under management and administration over the first nine months of 2019

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Third-quarter gross sales of £3.0bn in the three months to end-September were 12% lower on the same period last year

Quilter PLC (LON:QLT) reported a fund outflow and a fall in gross sales in the third quarter, though assets under management increased.

Third-quarter gross sales of £3.0bn in the three months to end-September were 12% lower on the same period last year, bringing sales to £9bn for the year to date.

READ: Quilter quits life assurance with £425mln sale to ReAssure

There were outflows of £2bn from the Advice & Wealth Management arm and £2.9bn from Wealth platforms, leading to overall outflows of £1.4bn, following a smaller trickle out in the second quarter. Excluding the group's Life business, which is being sold, overall outflows were just £0.5bn.

The FTSE 250-listed wealth management group, which was spun out of Old Mutual last year, said its total assets under management and administration (AuMA) ended the quarter at £118.7bn, up 9% over nine months, with AuMA from continuing operations up 11% so far in 2019 to £109.8bn.

This was expected to be a tough quarter for flows, with chief executive Paul Feeney saying it reflected “an uncertain political and economic backdrop” and the departure of a team of fund managers from the Quilter Cheviot investment management arm last year.

Looking for positives, as well as the growth in AuMA, Feeney pointed to positive gross flows at Quilter Cheviot in the quarter after recent investment manager hires.

“Notwithstanding the challenging backdrop, we continue to be encouraged by resilient gross flows and high levels of customer asset retention across our businesses which were broadly stable on 2018, excluding the impact of the Quilter Cheviot outflows,” Feeney said.

He added that the acquisitions of advice firms Lighthouse and Charles Derby Group were integrating well and expected to contribute “more meaningfully to flows from next year”, while the UK platform migration is also progressing.

Quilter shares were down 3% to 139.8p in early trade on Wednesday morning.

In a note to clients, analysts at broker Liberum said: "If you strip out the team departure and the loss of a quasi-institutional mandate then gross outflows YTD are +13%, reflecting general industry conditions. Note that flows to the platform will be being suppressed, to some extent, by industry knowledge that there is a migration coming."

The analysts noted that Quilter shares trade on 12.2 times its 2021 forecast earnings "and we continue to believe that by Q3 2020 it will be obvious that this is a growing business with half of profits from advice and wealth management, half from the UK’s 4th biggest adviser platform, such that it’s trading at a much higher multiple. Newsflow on the UK platform transformation will be key in this direction, late in Q1."

Quick facts: Quilter PLC

Price: 150.9 GBX

LSE:QLT
Market: LSE
Market Cap: £2.87 billion
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