Wealth manager Charles Stanley is set to expand its growing Financial Planning division despite the operation racking up losses of £2.7m in the past year.
The company, which offers a range of wealth management services including a SIPP, announced its annual results today showing revenues for the Financial Planning division grew by 26% to £6.3m although losses only declined slightly from £2.8m to £2.7m.

The company said the revenue growth was the “direct result of its roll-out of a new value proposition and pricing model for clients.”

Revenues per planner grew from £268,000 to £369,000 but despite the improvements losses grew as the group invested heavily in recruitment of new planners increasing numbers to over 20.

The company said the rising revenue per planner provided confidence in the future of the Financial Planning division.

The firm said: “Our ambition for the division is to grow it to represent at least 10% of the group's revenues.

“At this level, it will be of sufficient scale to contribute to the group's goal of being a holistic wealth manager. The additional investment required to recruit new Financial Planners to meet this goal is likely to lead to an increase in the division's losses in the near term.

“This is for two reasons. First because of the cost of recruitment. Secondly because it typically takes a period of 18 to 24 months for a new Financial Planner to get their revenues up to our target levels which historically have been set, on average, at £300,000, but have now been moved to £350,000.

“In the longer term we believe this investment will lead to greater asset inflows, greater share of wallet, enhanced customer retention and better defensibility of revenue margins because the service meets a fundamental client demand. In the process we expect it to enhance the group's profitability and quality of earnings.”

Overall the wealth manager said discretionary funds rose by 7.9% to £12.3 billion (2017: £11.4 billion) and revenue rose to £150.9 million (2017: £141.6 million), with growth in all divisions. Pre-tax profit was £11.4 million (2017: £8.8 million).

Paul Abberley, chief executive, said: "2018 has been another year of progress for Charles Stanley. We completed the disposal of non-core activities, further built profitability and began to scale the business.

“The group's transformation continues apace as we implement our strategy and deliver progress in the underlying key metrics.  That said, we recognise the need to accelerate the improvement in our financial metrics to match what is being delivered qualitatively across the business.