Old Mutual Wealth profits slashed by a third after legacy fee cut

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Profits at Old Mutual Wealth have slid by over a third (31 per cent) to £104m in the first half of 2016.

The firm – which is undergoing major restructuring – says the drop in adjusted operating profit was driven by cutting fees on legacy products and lower operating margins.

In July the provider announced a 1 per cent cap on pension exit charges and cut fees on its heritage book.

The FCA is investigating Old Mutual Wealth – along with five other providers – over their treatment of long-standing customers in older products.

The interim results also show funds under management increased 7 per cent from the start of the year to £111.2bn.

Old Mutual also reveals figures that show restricted Intrinsic advisers are delivering 33 per cent of net flows into the platform and 26 per cent of flows to Old Mutual Global Investors.

In addition, non-executive directors Simon Davies, Jane Hanson and Andy Pomfret have decided to step down from the Old Mutual Wealth board in October 2016.

Chief executive Paul Feeney says: “This has been a challenging six months for Old Mutual Wealth, and the whole industry, with volatile markets dominating the first half of this year, indeed it was the worst period for net retail flows for the industry in 20 years. Against this backdrop, I am pleased with the resilient net client cash flow that the business delivered of £3.2 billion, up 39% on that of the prior year.

“We are focused on executing our strategy and delivering good outcomes for our customers. Continued investment to achieve our strategy and to build capability for the future as a standalone business has had an impact on our bottom line for the half year, but our underlying revenue growth remains robust.

“Our advice-led, vertically integrated strategy is delivering year on year growth in net flows, increasing our funds under management despite weaker markets. We are in a great position to build competitive advantage and deliver sustainable long-term growth in profits, cash generation and value.”