Fiducian has posted a 9 per cent fall in underlying net profit after tax (NPAT) to $7.0 million and a 17 per cent drop in statutory NPAT to $5.5 million for the first half of its financial year.
In a statement to the ASX on Monday, the firm said that it recorded $166 million of net inflows over the period and declared $11.9 billion in funds under management, administration and advice (FUMAA) — a 3 per cent increase on the same period a year earlier.
“The half-year ended 31 December 2022 confirms we live in interesting times that deliver interesting results,” commented Fiducian executive chairman Indy Singh.
“In spite of this difficult period of economic, financial market and geopolitical turmoil, our growth strategy has not faltered and our operations have expanded. We believe this has come at a short term cost, which should eventually reap benefits for shareholders once things settle down.”
Despite financial market volatility, Fiducian posted a 7.1 per cent increase in funds under administration to $3.0 billion and a 7.9 per cent lift in funds under management to $4.1 billion.
Meanwhile, funds under advice jumped by 9.1 per cent to $4.8 billion, which the firm said was attributable to its successful growth through acquisition strategy.
Financial adviser numbers increased from 66 to 84, with Fiducian noting a further five franchisees have qualified through its selection criteria and are in the process of being inducted or have already begun operations under its branding.
Operating revenue increased by 4 per cent to $35.4 million, which the firm said was helped by acquisitions and new inflows during the period.
Among the major developments flagged by Fiducian for the half-year was the introduction of Fiducian’s culture and process into the financial planning business of People's Choice Credit Union (PCCU), which the firm acquired in 2021.
“Transitioning over 3,500 clients to the Fiducian processes took longer than anticipated while we completed the required actions to ensure regulatory compliance,” said Mr Singh.
Approximately 23 per cent of acquired client revenue did not opt in to transfer to Fiducian, mostly in the form of clients serviced by advisers.
“Financial planning management has worked hard to retain clients and establish literally a new business. Net revenue from the PCCU acquisition has been lower than anticipated due to a market driven decline in funds under advice and client losses,” Mr Singh noted.
“At this stage, we are seeing that PCCU client withdrawals have stabilised. Inflows from new and existing clients are in the pipeline and growing with additional training efforts that have ensured financial advisers are now conversant with the benefits of the Fiducan process.”
Additionally, Fiducian launched its new platform to offer separately managed accounts (SMAs) to the independent financial adviser marketplace called Auxilium, which the firm said would “disrupt the so-called disruptor platforms”.
“With all the above development and focus on growth, substantial expenses were incurred which have the potential to increase revenue in future years,” Mr Singh said.
“Meanwhile, the falling value of assets under management advice and administration due to financial market declines have suppressed potential revenue growth.”
Fiducian’s directors resolved to pay an interim fully franked dividend of 12.30 cents per share for the half year, compared to 14.80 cents per share for the prior corresponding period.
“We have continued with the board’s strategy to grow the business. The environment has been difficult and as explained, costs have risen, but with good reason,” said Mr Singh.
“In time, inflation will be tamed and as always wars and the impact of pandemics will end. Management has worked hard and judiciously through the turmoil and positioned all areas of the company for future growth by utilising its vast cache of intellectual capital,” he continued.
“The FUMAA has already increased by 4 per cent to $12.3 billion as at end of January 2023. With positive economic news to come, our people, stakeholders and shareholders should benefit over time.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.