March 12, 2019 / 7:56 AM / 3 months ago

UPDATE 2-Quilter clients in 'wealth preservation mode' as Brexit looms

* Says investor confidence could deteriorate further in 2019

* Has plan in place to mitigate Brexit impact

* Client sentiment hit by Brexit, trade wars (Adds CEO comments in Brexit, results, share movement)

By Noor Zainab Hussain and Samantha Machado

March 12 (Reuters) - Wealth manager Quilter said Britain’s looming exit from the European Union meant its clients were steering clear of new investments and that investor confidence could worsen in 2019.

Quilter, spun out of Anglo-South African insurance company Old Mutual last year, said Brexit and market uncertainty had continued to temper momentum, leading the company to be cautious on net investment flows for the current year.

Global markets have also been hit by the long-running trade war between Beijing and Washington. The FTSE 100 Index fell 12.5 percent in 2018.

“We are living in unprecedented times. In these uncharted waters, the only certainty seems to be uncertainty ... Clients are in wealth preservation mode at the moment,” Chief Executive Officer Paul Feeney told Reuters.

The company said a number of measures were in place to mitigate any impact of Brexit, including establishing a regulated asset management company in Ireland.

“Recent quarters have seen reduced levels of investor confidence and this could deteriorate further, potentially materially further, under various scenarios related to the UK leaving the EU,” Quilter said in a statement.

Prime Minister Theresa May won legally binding Brexit assurances from the European Union on Monday in a last ditch attempt to sway rebellious British lawmakers who have threatened to vote down her divorce deal again.

Quilter also posted a 4 percent fall in total assets to 109.3 billion pounds ($144.4 billion), as it announced its maiden set of full-year results as a standalone company.

A migration of advisers to its new platform may hit the flow of new money and Quilter may undershoot its 5 percent growth target for net client cash flow (NCCF) on a medium-term basis in the calendar year 2019, it said.

“I suspect it (uncertainty) won’t all end at March 29, it would continue a bit longer and that could have some impacts on our overall net flows during the year,” Feeney said.

NCCF fell to 2.7 billion pounds for 2018 from 6.3 billion pounds a year earlier, while pretax profit was 5 million pounds, compared with a loss of 5 million pounds in 2017.

Quilter, which manages investments for more than 900,000 customers, also recommended a final dividend of 3.3 pence per share.

Feeney said Quilter would do smaller bolt-on acquisitions to grow its financial advice business in 2019.

Quilter’s FTSE 250 shares, which have lost more than 10 pct of their value in 2019, were largely unchanged at 132.1 pence in early trading. They were priced at 145 pence when Quilter was separated last June. ($1 = 0.7571 pounds)

Reporting by Noor Zainab Hussain and Samantha Machado in Bengaluru Editing by Anil D'Silva/Keith Weir

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