Positive Solutions has posted a £7.4m loss before tax for 2009 after making a £5.7m profit a year earlier.
The firm says the economic downturn impacted heavily on the business and also highlighted higher regulatory fees – primarily relating to a £1m FSCS levy – and one off costs to improve its governance and compliance controls.
The results include a £5m write-off relating to its Prophitshare share option. Chief executive Jim Reeve says the group was keen to create a clean starting point for its balance sheet to move forward with.
The results also reveal the firm is looking at broadening its proposition to support a number of different IFA business models over the next year.
PosSol has also seen its turnover decrease by 15 per cent in 2009 to £85.1m, from £100.7m in 2008. It says this is on the back of a depressed housing market, stock market volatility and the shift towards recurring income on the back of the RDR.
PosSol has introduced a Performance Improvement Plan to review all areas of expenditure in order to improve its efficiency. The firm says this discipline is set to continue into 2010.
The group also revealed that it invested £11.5m in a loan arrangement with parent Aegon due to lower interest rates on cash. After completing the transaction the group held £13.6m in cash.
Reeve says: “Although 2009 was a challenging year we achieved significant progress in asserting our position as a leading player in the financial advisory market. We invested heavily in strengthening our governance and framework, developing our capabilities and establishing key elements of our evolving business model.”
Reeve says the firm has recruited 234 IFA partners to the firm last year, while a further 98 joined in August 2010. PosSol says 110 members left between December 2009 and the end of June 2010 although this number excludes advisers who are still working their notice period.
He says: “We’ve taken actions that have resulted in some advisers seeing PosSol as a place they no longer want to work in and that is fine. The important thing is that at the end of September our IFA turnover is up 11 per cent on 2009 but adviser productivity is up 21 per cent. The shows the need to focus on high quality, professional advisers. Having lots of advisers selling low levels of business does not sound like a good business model to me.”
At the end of September the group had 1,507 IFA partners. Reeve says the vast majority of its adviser departures were those who wrote less than £25,000 of business, decided to retire or had long-term illnesses.
Reeve says he sees the value of the FSCS levy but that there will be failures going forward and that those costs must be allocated appropriately across the market.
He says: “I feel some of the distribution costs in the past have been inequitable and some of the IFAs feel unfairly burdoned with some of these costs.
Earlier this year PosSol appointed KPMG to check its partners pensions and investment sales, a move which advisers within PosSol said was”pulling the company to pieces”.
Reeve says the ongoing business review is essential to the business and that the group is keen to ensure it has provided suitable advice to its clients in the past.
He says: “We hope it will be complete in the near future and I do not believe there has been any evidence of systemic misselling within the PosSol business. We had to do it and it is for the long term benefits of the business.”