Making the changes needed for the impending Mifid II overhaul in January had cost more than expected, the firm said, and “adversely affected profitability” in the year to 30 November 2017.
Transitioning the private wealth management business from a commission and execution model to a more discretionary, advice-driven fee model had also brought with it higher than expected costs that detracted from profits, it said in a trading statement.
However, it said: “Duplicated costs incurred during the period will decline significantly in 2018 benefiting future profitability.
“The group has had an improved year from a revenue perspective and the board expects this positive momentum to continue into 2018,” it added.
The group’s discretionary investment arm has continued to grow according to the trading statement, with fee income up 15% compared with the previous year.
Revenue in the wealth planning team saw growth of about 40% over the last 12 months.
The firm said it will continue to trim the number of client relationships generating low returns through 2018 while adding to its current list of 86 institutional and corporate clients.
