Fiducian expects upswing in inflows helped by advisers in 2024

In its full-year results released to the ASX on Monday, Fiducian reported a 4 per cent decrease in underlying net profit after tax (NPAT) to $15.11 million for the 2023 financial year.

Statutory NPAT was reported to have decreased by 7 per cent to $12.32 billion due to the “uncertain economic environment”, which saw the firm’s funds under management, administration and advice (FUMAA) fall during the early stages of FY23.

But thanks to a rebound seen in share markets during the last quarter, Fiducian indicated that its FUMAA ended the financial year up 13 per cent to $12.34 billion.

“Fiducian is now in its 27th year of operation. Since inception, our objective to become and remain a profit-generating company for the benefit of our shareholders has not wavered,” commented Fiducian chairman Indy Singh.

“Yes, we do get affected from time to time by geopolitical tensions and correspondingly financial market gyrations, but the board’s mandate to management to operate a stable business that aims to deliver steady growth based on the principles of people, profit, and planet is being delivered.”

Funds under advice increased from $4.39 billion as at June 2022 to $4.61 billion as at June 2023, representing an increase of 5.1 per cent. Fiducian recorded $364 million in total net inflows during FY23, including $100 million attributed to Auxilium and badges.

Following its acquisition of the financial planning business of People’s Choice Credit Union (PCCU), Fiducian indicated that advisers coming across from PCCU had started placing clients in the firm’s platforms on a client best interest basis.

“We expect net inflows to rise in 2024 as new financial advisers, particularly those from PCCU in South Australia and the Northern Territory along with new franchised offices, appreciate the many benefits of the Fiducian compliant process for clients,” Mr Singh said.

“Fiducian expects the highest level of compliant and client service from its financial planning network. It is possible that we may have one of the highest supervisory management to financial adviser ratios in Australia, but we feel this is necessary.”

Mr Singh said the firm’s focus would remain on generating inflows through organic and inorganic growth as further acquisitions of client bases are being negotiated.

Fiducian now has 41 salaried advisers and 39 franchised advisers across 45 offices nationally. Salaried offices comprise over 53.4 per cent of funds under advice, while franchised offices comprise approximately 46.6 per cent.

Funds under administration on Fiducian-labelled platforms grew to $3.27 billion as at June 2023, up from $2.75 billion a year earlier. As at July 2023, funds under administration sat at $3.33 billion or 10 per cent higher than the FY23 average.

The firm noted that funds under administration for IFAs accounted for approximately 14 per cent of its total funds under administration.

“Efforts are underway to build new relationships and increase net inflows from non-aligned financial adviser groups, in particular, through SMA administration services and wider adoption of our existing platforms and funds,” said Mr Singh.

Meanwhile, Fiducian’s funds under management (FUM) grew from $3.80 billion in June 2022 to $4.46 billion in June 2023. The $4.59 billion in FUM declared as at July 23 was 12 per cent above the average in FY23.

Operating revenue increased 6 per cent over the previous financial year to $73.31 million. Underlying EBITDA was reported to have decreased by 4 per cent to $20.86 million.

A fully franked final dividend of 18 cents per share has been declared, taking the total fully franked dividend for FY23 to 30.3 cents compared to 29.7 cents in FY22.

“Consistent with our strategy over the last 27 years, our focus remains the establishment of a business with a rock-solid foundation and growth strategies to enable upscaling on existing capacity and leveraging our controlled, relatively low fixed cost base. This strategy has benefited us in difficult and uncertain times,” Mr Singh said.

“The board’s aim remains to build scale and deliver consistent double-digit earnings growth in coming years and management is determined to stay committed and focused in this difficult climate, to achieve this goal.”

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.