Quilter Cheviot took a £1.3bn hit to its cashflow last year as money followed former Cheviot founder Michael Kerr-Dineen to his new venture Vermeer Partners.
The discretionary investment arm of Quilter reported net client cash outflows of £800m in 2019, compared with an inflow of £700m in 2018. This came despite higher gross sales of £2.6bn in 2019 versus £2.5bn the year before.
Overall, Quilter’s group assets under management and administration (AUMA) increased 13% over the year to £110.4bn, driven by positive market performance of £12.4bn and net inflows of £300m.
£1.3bn follows Kerr-Dineen to new venture
Quilter said £1.3bn of outflow from Quilter Cheviot was linked to the departures of senior investment managers who resigned in mid-2018 and the loss of a £200m quasi-institutional mandate.
In 2019 several investment managers left Quilter Cheviot to join Cheviot Asset Management founder Kerr-Dineen’s new venture, Vermeer Partners, which was established in June last year with more than £1bn AUM.
Quilter’s results statement said: “The departures of a group of investment managers who resigned in mid-2018 had an impact on outflows in the business once their non-compete restrictions expired in the second quarter 2019. We recorded outflow requests totalling £1.3bn from clients looking to follow these investment managers.”
Despite this, Quilter Cheviot’s assets under management and administration (AUMA) increased 9% over the year to £24.2bn.
Quilter Investors meanwhile saw net client cashflow of £500m in 2019 compared with £2.8bn in 2018. This meant AUMA jumped 18%, from £17.7bn in 2018 to £20.8bn in 2019.
UK platform flows hit by market uncertainty
The group said market uncertainty resulted in a lower level of new gross flows onto its UK platform from third party financial advisers ahead of its planned platform migration this year. This led to lower levels of flow into Quilter Investors, with the combination of these factors leading to lower net flows.
Quilter said it had migrated 38,500 accounts from 25,000 clients representing AUA of £4.3bn to its new UK platform in February. The total costs of the project are expected to be around £185m, of which £136m had been spent by end-December 2019.
Quilter chief executive Paul Feeney (pictured) said: “2019 was a pivotal year for Quilter. Not only were we pleased with a 3% increase in adjusted profit to £182m, excluding QLA [Quilter Life Assurance], after business investment via acquisitions and new premises expenditure of around £10m, it was also a great year for delivering on our transformation agenda.”
