2021 was a year where the world began to adapt to a new normal, living with COVID as a permanent feature of our lives. This has meant blending homeworking with the traditional office environment, maintaining a high level of firm-wide communication and employee engagement while continuing to engage with our customers through whichever channels suit them best.
There were three significant corporate-defining moments for Quilter in 2021:
- completing our Platform Transformation Programme early in the year,
- completing the sale of Quilter International at the end of November, and
- the reorganisation of the business into new segments that we announced at our Capital Markets Day on 3 November.
Together these events mark the culmination of a strategic journey we have been on since our Listing in June 2018 and which has made Quilter a UK-focused modern wealth manager. We now look forward to delivering on the opportunity we see before us and our 2021 results demonstrate excellent progress towards those goals.
A year ago, I said that there were three strands to our strategic transformation agenda at Quilter:
- we would leverage the transformational power of our new UK Platform to drive faster growth and productivity;
- we would make Quilter a simpler business, focused on customer segments, to deliver even better customer outcomes and journeys; and
- we would optimise our business by completing the cost reduction plans we set out in March 2019, to drive operational leverage.
We have made substantial progress on each of these goals during 2021. Taking each in turn:
We completed the migration of client and adviser relationships onto our new UK Platform in February 2021; a significant milestone. We rebranded the UK Platform to the Quilter Investment Platform in July and decommissioned our legacy platform at the end of the summer. I am delighted with the high levels of engagement and adoption we have enjoyed from both our own advisers (the Quilter channel) and independent advisers (the IFA channel). Notably, gross flows in the IFA channel were up significantly year-on-year (+63%) after a number of years of sequential declines. This growth is already having a beneficial impact on our operating momentum.
Secondly, making Quilter a simpler business, the sale of Quilter International has allowed us to simplify our operating model. We announced plans to reorganise our Company into two new segments, Affluent and High Net Worth, at our Capital Markets Day in November 2021. These segments are now focused on driving growth, improving efficiency and delivering good customer outcomes across their respective client bases.
Lastly, we delivered £61 million of cost savings from our Optimisation plans by end-2021 and are on track to deliver £65 million of total savings from this programme by mid-2022. These actions are already benefitting our operating margins. As well as simplifying our operating model, the sale of Quilter International will also allow us to deliver meaningful cost savings through eliminating legacy complexity in our IT infrastructure once the Transitional Service Agreement with the purchaser comes to an end. We announced a further £45 million of cost savings at our November Capital Markets Day which we expect to deliver by the end of 2024 as part of our goal to increase our operating margin to at least 25% and 30% by 2023 and 2025 respectively.