Intrinsic expects losses to continue as adviser headcount drops

Board-Room-Meeting-Room-Business-700.pngIntrinsic Financial Services has reported a total comprehensive loss of £10.4m for the 12 months ended 31 December 2016, as it predicts losses to continue.

The loss at the Old Mutual Wealth-owned business is less than the £11.5m reported in 2015.

Operating losses decreased from £12.9m to £8.9m.

The results statement says: “The decrease in the [operating] loss is despite additional investment in recruitment, technology implementation and an increase in group management costs including strategy and governance together with the waiver of certain amounts due from non-trading subsidiaries.”

It adds: “The company is expecting losses to continue, albeit on a reducing basis, as it continues to invest in the implementation of its growth strategy.”

The total number of advisers at the business dropped slightly from 3,380 in 2015 to 3,307 in 2016.

Administrative expenses increased from £43.7m in 2015 to £66.4m in 2016.

The statement says: “The level of administrative cost incurred continues to exceed the recoveries made from subsidiaries which reflect the level of investment in integration and strategic development together with centralised recruitment activity undertaken in securing self-employed appointed representatives to the advice propositions available within the company’s subsidiaries.”

In 2016 Old Mutual Wealth gave Intrinsic a capital contribution of £15m to support the business. The results statement says further contributions have been agreed.

An Old Mutual Wealth spokesman says restricted adviser numbers have increased by 11 per cent so far in 2017.

The spokesman says: “Investment in growth across the network, including Old Mutual Wealth Private Client Advisers, is supported by capital injections from Intrinsic’s parent company.”

Intrinsic Wealth results

Meanwhile, Intrinsic Financial Services subsidiary Intrinsic Wealth, which is mostly made up of independent advisers, reported a total loss of £1.4m for the 12 months ended 31 December 2016, increasing its losses of £1.2m the year before.

In January, Intrinsic reorganised its business model into a wealth network, a mortgage network and a wealth national business. The results, filed to Companies House, say Intrinsic Wealth Limited is most closely aligned with the wealth network part of Intrinsic.

The loss before tax at the business was £1.78m, compared to £1.62m in 2015.

The business recorded a 16.7 per cent increase in administration costs for the year to £7.3m.

Turnover increased marginally from £37.1m in 2015 to £37.9m last year and gross profit rose from £4.7m to £5.6m.

The results statement says, in 2016, the company recognised £938,000 of charges relating to a “long-term incentive plan” for advisers. The first tranche will be paid out in April 2017 and the remainder in 2018 and 2019.

Adviser numbers at Intrinsic Wealth fell in 2016. Financial planner numbers dropped from 212 at the end of 2015 to 190 at the end of 2016. Overall adviser numbers dropped from 317 to 294 in the same period.

The statement says: “The underlying trend on the financial planner headcount within the company has been downward with many firms having chosen to migrate to a restricted proposition elsewhere within the Intrinsic group.”

Intrinsic Financial Planning

Subsidiary Intrinsic Financial Planning, which has mostly restricted advisers, reported 2016 profit after tax of £337,000.

Gross profit was £24m but the business amassed £23.5m in administrative expenses over the 12-month period.

The business’s results statement shows adviser headcount at Intrinsic Financial Planning increased from 1,044 to 1,079.