Assets looked after by James Hay parent company IFG Group showed a healthy increase in the last year, but profits took a heavy hit.
IFG Group saw its assets under administration and advice increase by 19 per cent to £29bn in the past 12 months.
But despite this the company saw itself fall into the red, with a loss of £101,000 in the first half of 2017 compared with a profit of £4m for the same period last year.
IFG Group has attributed the 103 per cent decrease in profits to the fall in interest rates in the second half of 2016, which affected James Hay.
Self-invested personal pension provider James Hay saw a £3.3m loss of interest revenue as a result of rates being cut to 0.25 per cent, bringing IFG Group’s revenues down £1.4m to £38.5m.
John Cotter, chief executive of IFG Group, said: “Both [James Hay and Saunderson House] are delivering strong growth in clients and assets, reflecting the quality propositions that they offer our clients, and our ability to compete successfully in our chosen markets.
“Whilst short-term financial performance is being impacted by the low interest rate environment, restructuring costs and the resolution of legacy issues, we expect a much improved second half underlying performance, particularly in James Hay as the effects of repricing and restructuring start to bear fruit.
“We are confident that both businesses are on a strong growth trajectory and that the underlying performance will translate into a much improved financial performance in 2018.”
He added that the changes James Hay has made to its pricing model will offset the lost revenue.
IFG Group has said it is still in discussions with HM Revenue & Customs over legacy non-standard investments in which some of James Hay's clients invested, mainly a structured bio-fuels investment known as Elysian Fuels.
Mr Cotter said the outcome of these discussions, which it announced earlier this year, could be "material" to the company's results for the year but said there had been no update on their outcome.
James Hay saw its total number of self-invested personal pensions increase by 4 per cent to 53,765 but new Sipps increased by 50 per cent to 3,075.
IFG Group said James Hay’s recent growth had been driven by the growing trend of people moving out of defined benefit pensions into Sipps.
Meanwhile the total number of clients at national independent financial adviser Saunderson House increased by 8 per cent to 2,056 in the past year.
James Hay administers more than £24.2bn of client assets while Saunderson House advises on just under £5bn of assets.
damian.fantato@ft.com
