Total assets under management and advice fell by just 1% overall, from £500bn to £494bn, with growth in interactive investor and its Adviser platform partially offsetting outflows.

Net operating revenue fell by 4% year-on-year to £1.4bn as a result of both outflows and “adverse markets”, according to the company, while adjusted operating profit was 5% lower at £249m. The business’s cost-to-income ratio remained unchanged at 82%.

Investments arm

Adjusted operating profit in the investments arm of the business shrunk by 62% in 2023 compared with the previous year, by £80m to £50m. This was the result of 17% less revenue, but Abrdn said this was “party offset” by an 11% reduction in costs.

Gross flows in 2023 fell by 15.2% from £59.3bn to £50.3bn, which Abrdn said was owing to the uncertain market environment and its impact on investor sentiment.

Performance of mandates also suffered, with 42% of products outperforming their benchmarks over three years to the end of 2023, compared to 65% to the end of 2022. The firm said this reflected a “challenging period for active managers” and said its equity funds were particularly hard hit, owing to AUM bias towards Asia and emerging markets as well as its quality-growth investing style.

The investments arm of Abrdn’s business has suffered lacklustre performance over recent years and has subsequently been undergoing a “transformation plan”, with the firm announcing 500 redundancies amid stubborn outflows earlier this year. The company has also been merging or closing some of its funds and investment companies to stem outflows, including folding GARS into its Diversified Assets suite of products in July 2023.

See also: Abrdn confirms 500 redundancies in cost-cutting ‘transformation plan’ amid £12.4bn outflows

CEO Stephen Bird aims to reduce business costs by at least £150m by the end of 2025 compared with last year, with 80% of these savings coming from the investments business alone. Implementation costs are expected to reach £150m and will largely take place throughout the course of this year, with the group’s adjusted operating profit expected to be £60m lower by the end of this year.

Interactive Investor and Adviser

However, Interactive Investor, which Abrdn acquired in 2022, saw its net operating revenue increase by 43% from £201m to £287m, with adjusted operating profit ticking up 58% in 2023 to £114m, compared to £72m in 2022. Net customer growth increased by 4% while net flows stood at £2.9bn.

Meanwhile, its Adviser platform experienced a 21% rise in net operating revenue to £224m from £185m in 2022, due to higher income from Treasuries. Adjusted operating profit also increase by 37% to £118m, although inflows – including into its model portfolio service – dropped by 12%.

Commenting on the group’s overall results, CEO Bird said: “We have continued with our determination to build a modern investment company that is capable of thriving in a changing marketplace. In January of 2024, we took the next step in that process, announcing a £150m cost transformation programme to accelerate the delivery of a more sustainable cost base that can support appropriate long-term profitability. The need to continue applying downward pressure on costs was underlined by another challenging year.

“Throughout 2023, the ‘higher for longer’ rate environment across developed economies put sustained pressure on most asset classes, and while the market now expects a reversal over 2024, there is no doubt that we have felt the effects in our Investments business. The upside is the impact higher rates have had on income in Adviser and ii, underscoring the benefits of our diversified business model, which delivers through the economic cycle.”

He added: “When we embarked on our transformation journey back in 2021, not many would have foreseen the level of global economic and geopolitical turmoil we have since experienced. That has inevitably hindered our progress, and directly impacted performance.

“Nonetheless, we have moved at pace to evolve the business and create a model that is better suited to the modern investment landscape, better aligned to the products and services clients will want in the coming years and better positioned for future growth.”

This article was written for our sister title Portfolio Adviser

Gross inflows in 2023 stood at £15.4bn, a 9.6% decrease compared with last year’s £17bn figure. Closing funds under management increased by 13.4%, however, from £148.4bn to a record £168.2bn, with advisers bringing £3.7bn of new client investment into the business during Q4 alone.

The retention rate for SJP’s funds under management in 2023 stood at 95.3%, a modest reduction from its 96.5% retention rate in 2022.

Meanwhile, net flows into SJP’s Cash Deposit Service, run by Flagstone, increased by 65% from £2.5bn to £3.9bn over the course of the year.

Mark FitzPatrick, the firm’s CEO who joined from Prudential at the end of last year, said performance has remained “robust” amid a “solid year” for the business, despite a “difficult industry backdrop”.

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“While the need for trusted face-to-face financial advice remains as strong as ever, client capacity and confidence to commit to long-term investment have been impacted by the economic environment and short-term alternatives in the form of cash deposit and savings rates,” he said.

“Our IMA performed very well during 2023, delivering strong investment returns relative to peers for the benefit of our clients. This, combined with ongoing net inflows, has driven funds under management to a record £168.2bn.”

FitzPatrick added that he continues to see a “huge opportunity to support more clients who need help and advice”.

“I want SJP to capture this long-term opportunity, so as we start planning our vision for 2030 I am reviewing all elements of our business to ensure we are fully fit for the future and best placed to keep delivering for all our stakeholders.”

In October last year, SJP announced a restructuring of its fees including scrapping early withdrawal charges and gestation periods for most of its new investment bonds and pensions. It has also changed the management line-up on several of its funds recently in a bid to reduce charges.

Analysts at brokerage Jefferies have rated SJP shares as a ‘buy’, concurring with the CEO that the update is “solid” at a time of “improving underlying conditions”.

“Gross inflows were in line, but outflows are slightly elevated,” they stated. “Adviser numbers are very slightly below forecasts, but do not imply an exodus at this stage. Improving market performance may help customer confidence in future periods. The CEO’s review as he plans for 2030 may introduce some uncertainty into shareholders’ minds, but we do not envision major structural change.”

This article was written for our sister title Portfolio Adviser

This represents a jump of 44% on the £1bn it took in through the same route a year ago. The strong quarter meant annual channel gross and net flows to the platform increased by 15% and 14%, respectively.

Total assets under management and administration rose 5% in the quarter to £106.7bn, reflecting ‘supportive markets into year-end’ as well as positive net flows.

Gross flows to Quilter as a whole in the quarter were £2.98bn, while net flows were £56m, down from £159m in the fourth quarter last year. Inflows increased 16% in the high net worth segment and 12% in the affluent segment.

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Chief executive Steven Levin (pictured) commented: “In what has been a tough year across the industry, we finished 2023 on a positive note with improved fourth quarter performance relative to the third.

“The Quilter channel continues to drive strong net flows in both our affluent and high net worth segments. Our focus on reshaping our advice business is demonstrating clear results, with Quilter channel gross sales per Quilter adviser increasing 21% on the prior year comparative period.

“Across the industry, 2023 saw a lot of focus on strategic positioning of businesses within a Consumer Duty context; we remain confident that our open and unbundled business model leaves us well positioned for the current environment.”

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Total customer numbers on the platform rose 12% in the year and 2% in the quarter to reach 484,000.

The firm’s total assets under administration jumped 7% in the quarter to hit a record £76.2bn, up 15% over the year.

Gross inflows in the quarter were £2.7bn, while net inflows in the were £1.3bn.

See also: What does 2024 hold in store for the wealth management industry?

AJ Bell’s Investments division recorded an 11% jump in assets under management in the quarter to £5.2bn. Net inflows in the quarter were £0.4bn, matching the same period a year ago.

Chief executive Michael Summersgill commented: “Some of the macroeconomic headwinds experienced throughout 2023 showed signs of improving in the quarter, driving global equity markets higher and easing some of the pressure on household finances.

“As we look ahead, our platform will continue to appeal to both current and potential customers and advisers,” he continued. “We continue to invest in enhancing our propositions, with a strong focus on ease of use, whilst also investing in our pricing to ensure we continue to deliver great value to customers.

“Whilst this strong start to the year provides good momentum as we head into the busy tax year end period, we remain focused on the long-term growth opportunity that exists in the platform market and the investments that we are making into our propositions and pricing will further strengthen our long-term competitive position.”

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The MPS range, which includes the BM Investment Solutions offering for advisers, saw a 7.3% rise with organic net flows contributing 3.3%.

For the group as a whole, net flows dipped into negative territory, with £600m flowing in, up 1.5%, and £700m being pulled out.

The firm said the outflows were driven by the backdrop of volatility and higher interest rates continuing to affect client behaviour.

See also: What does 2024 hold in store for the wealth management industry?

Investment performance easily cancelled out the outflow though, with total funds under management up 4.3% in the quarter to £17.6bn.

Turning to the outlook for the rest of the year, the firm said it expects to see momentum in inflows. The level of gross outflows and the resulting full year net flows will be ‘dependent in part on macroeconomic factors’.

It expects full year profit and the underlying profit margin to be in line with market expectations.

CEO Andrew Shepherd commented: “I am pleased to report growth of 4.3% in the group’s FUM for the first half of the financial year. This result is a testament to the expertise and hard work of our people who are committed to delivering on our purpose to ‘realise ambitions and secure futures’ for all our stakeholders.

“During a challenging period for both the economy and financial markets, we continued to see healthy demand across our range of products and services.”

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