Challenger nets record profit, implements new planner strategy

Challenger Financial Services has announced a record first-half profit of $130 million after tax — an increase of 117 per cent over the previous corresponding period last year.

The record profit announcement comes at the same time the company readies itself for the implementation of a new strategy for its financial planning business.

Challenger chief executive Mike Tilley attributed the result to financial discipline within the group, with three of its four divisions having met or bettered their return on assets target of 18 per cent.

“We have completed a strategic review of financial planning and implementation of the strategy is due to commence from July 1,” he said.

Looking at the financial planning practice, Challenger said it had funds under administration and advice of $7.7 billion and had increased net income over the six-month period by 4 per cent to $24 million.

The group recorded a 24 per cent increase in expenses to $21 million, but said that of this $4 million increase, $1.2 million related to the restructure charge.

The company’s analysis said the strategic review of financial planning had been endorsed by the board and noted “an opportunity to ‘industrialise” the business, including:

• standardising licensee essential services;

• offering value adding optional services to optimise member firm efficiencies;

• a new adviser remuneration scheme to enhance alignment between client, adviser and shareholder goals; and

• utilising the scale of the network, which consists of over 400 planners.