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Cavanagh profits hit by RDR transition
20 September 2010
IFA Cavanagh warns short term profitability may be sacrificed as the group evolves to meet RDR requirements. Its interim results reveal this impact is already being felt with profits before tax of £202,000 from a revenue of £7.67m for the six months ending 30 June. This is down from £312,000 and £7.95m respectively for the same period in 2009. However, the firm's net debt has been slashed from £1.47m to £335,000, while the level of discretionary funds held by Cavanagh Asset Management has increased from £69m to £196m. Group chairman Paul Sinnett attributed the drop in profits to continuing uncertainty in the economic environment and the company's efforts to become RDR compliant. "It is clear the regulatory landscape is forcing all IFAs to re-think their future client proposition - the board believes that it has a clear view of what this will mean for Cavanagh and, as evidenced by the already high level of recurring income which we generate, it is on a path towards its goal. "However, short-term profitability may be sacrificed while the group's model and client offerings are improved through continued investment to provide not just a robust RDR-compliant proposition, but one that is market leading." He also reaffirmed Cavanagh's commitment to introducing a wealth management platform this year. Sinnett says: "We previously reported we had engaged with SEI to supply Cavanagh Wealth Management with its own platform and I am pleased to report this project remains on schedule to be launched in the fourth quarter of this year. "This is one of the key offerings we are promoting to improve our client offering and we will be announcing further significant enhancements to our investment proposition which we hope to also launch in the final quarter." Published by IFAOnline
