Similar to St James’s Place (SJP), Quilter was instructed last year to conduct a skilled persons review of its ongoing advice services. However, analysts at Panmure Liberum estimate Quilter’s financial exposure to be significantly less severe than SJP’s, which was forced to allocate £426 million.
This is great news for Quilter and their clients.
Quilter (formerly known as Old Mutual) are one of the largest and most successful financial services groups in the UK have one of the most affordable and accessible investment platforms which continues to be embraced by Independent Financial Advisers (IFA) around the country.
The subject of the skilled persons review specifically surrounds their Wealth Management arm where Quilter take responsibility for financial advisers and firms who advise on pensions and investments under their banner.
As with SJP, it appears that in some cases, advisers operating under Quilter’s Wealth Management arm, may not have been carrying out regular reviews with their clients which clients were paying for.
Whether it is Quilter, SJP or any financial advice firm, advisers have a responsibility to carry out regular reviews of your pensions, investments and general financial circumstances (such as your attitude to risk) to ensure that the products and services you have remain in line with your needs an objectives, particularly when it comes to planning for your retirement.
If you had a financial adviser who has not carried out regular reviews then you can read more about making a financial adviser claims here.
So what does this mean for Quilter and their shareholders?
Conservative Provision Estimates
Following Quilter’s recent fourth-quarter trading statement, Panmure Liberum projected a potential redress figure of approximately £115 million. Despite this provision, the analysts maintain a “buy” recommendation with a target price of 180p.
Their analysis suggests the worst-case scenario would result in a cost equivalent to around 8p per share if Quilter sets aside £115 million and does not recover costs from advisers. Panmure also estimated that the expense of consultants conducting the skilled persons review could reach “high single-digit millions” during the second half of the year.
Awaiting Updates
Quilter has announced that it will provide a detailed update on the review during its full-year results announcement on 5 March 2024. However, it has not confirmed whether funds will be set aside for client compensation or to cover the costs of the review.
The Financial Conduct Authority (FCA), which initiated a wider review of ongoing advice practices by collecting data from 20 major advice firms last year, has not yet issued further updates. Apart from SJP, no other firm has disclosed the scale of their potential compensation liabilities, though Ascot Lloyd indicated last year that it might face a compensation bill.
Quilter’s Valuation
Despite these uncertainties, Panmure Liberum views Quilter as an undervalued investment opportunity, especially given its current share price.
“The shares are trading at a 2025 price-to-earnings (P/E) ratio of just 14.8x, compared to the sector average of 18.1x. This suggests that any potential provision is already accounted for in the current valuation,” the analysts noted.
They argue that Quilter should command a valuation closer to the sector average. Medium-term growth is expected to be driven by cost-saving initiatives, improved adviser productivity, traction on its new platform, and a return to growth in in-house advisers. Additionally, a forecasted 2025 dividend yield of 4% is likely to attract income-focused funds.
Key Drivers of Quilter’s Strength
The Liontrust Special Situations fund, managed by Anthony Cross, recently invested in Quilter, citing its robust recurring revenue model.
Panmure highlighted Quilter’s “best-in-class” WealthSelect Managed Portfolio Service (MPS) as a standout performer. This service, now available on third-party platforms, had reached £16 billion in assets by mid-2024, making it a strong competitor to solutions like Tatton.
The ongoing trend among independent financial advisers (IFAs) to outsource investment management to solutions like WealthSelect has further bolstered its performance. This shift away from IFAs managing their own investment portfolios reflects a growing demand for outsourced MPS solutions.
Platform Performance
Quilter’s investment platform also earned top marks from Panmure Liberum, ranking as their preferred choice among its peers. The platform’s improved inflows during the fourth quarter further underscore its competitiveness.
Quilter declined to comment on Panmure’s assessment of its financial and strategic position.
Summary
If you are a client of Quilter Wealth Management, or any Financial Adviser, and have not received regular annual reviews, then you should raise a complaint with Quilter to ensure their case is reviewed.
However if you are somebody who does not have the time, confidence or inclination to raise a complaint yourself, then companies like us can manage the complaints process for you and represent you on a no-win no-fee basis. This includes escalating a complaint to the Financial Ombudsman Service if and when required.
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