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Saunderson House changes pricing after discretionary wins

Saunderson House changes pricing after discretionary wins

Client assets held by Saunderson House rose in the first six months of this year to reach £4.9 billion as the firm signed up 144 new clients to an overall 2,056.

Saunderson House said the client wins came from its recently launched discretionary business, which has seen ‘encouraging demand’ from traditional client segments and advisory clients, as well as those with lower initial value portfolios.

It said this is ‘positive for the long-term development’ of the service, but added there would be a ‘short-term impact on revenues, as there is an inherent lag in the generation of income from our discretionary service in comparison to that of our advisory service'.

The firm revealed it has amended its pricing structure for the discretionary business to include an initial fee at inception.

The initial fee stands at 0.8% with a maximum charge of £20,000.

Saunderson House said the initial fee ‘covers the costs of advice and taking on a client's portfolio’ and added that the charge will be levied for all new discretionary clients ‘so that we cover our [client] acquisition costs.’

Parent group IFG, which also owns pensions administrator James Hay, said it made pricing changes in both businesses to 'offset much of the revenue lost in H1 due to a material fall in interest revenue, and ensure the business continues to be correctly compensated for the value it provides to its clients'.

Overall revenue at IFG fell 4% in the first half of this year, dropping to £38.5 million compared to £39.9 million for the same period the previous year.

The pricing changes are expected to increase revenues by around £2 million in the second half of this year.

The company has also set aside £2.7 million in exceptional costs relating to legal and remediation costs driven by Elysian Fuels, as well as H1 restructuring costs in James Hay to 'accelerate efficiency gains', with a further £1 million of restructuring costs anticipated in H2 this year.

Elysian Fuels was a non-standard investment scheme which invested in biofuel and was set up by a company behind a number of film schemes which has been involved in a long-running legal battle with HMRC.

Elysian Fuels was listed on the Channel Islands Stock Exchange and put money into biofuel refinery projects. It marketed returns of up to 10 times the original investment over eight years.

In 2015 the Daily Telegraph reported that the value of the Elysian Fuels scheme had been written down to zero. HMRC has been concerned about tax relief claimed by investors who sold their shareholding to their Sipp.

Revenue in the six months to 30 June at Saunderson House was up 2% compared to the same period the previous year, rising to £16.2 million. Operating profit was also up, jumping 8% to £3.9 million.

Total client assets across James Hay and Saunderson House rose 19% in the last 12 months to £29.1 billion.

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