After board appointments averted Blucora’s second activist investor campaign in two years, the midsize wealth manager it owns is making “strong organic progress,” its CEO says.
Blucora’s Avantax, a wealth manager focused on CPAs and other tax professionals, reeled in a record $1 billion in net new advisory assets in the first quarter, according to the Dallas-based firm’s May 4 earnings statement and CEO Christopher Walters’ call with analysts. While macroeconomic woes due to Russia’s invasion of Ukraine and inflation pushed down Avantax’s earnings for the quarter, Blucora successfully convinced activist Engine Capital to withdraw its slate of candidates in March after the firm hired a former investment banker and a cybersecurity expert to its board. Meanwhile, Avantax also had a successful recruiting quarter, despite the continuing losses to its overall headcount of advisors.
“Volatile, declining equity markets during the period temporarily offset the benefits of strong execution and, as you would expect, negatively impacted our financial results versus prior expectations. These headwinds, however, pale in comparison to the long-term benefits of the strong organic progress we are making, which coupled with favorable interest rate outlook, has the potential to double the run-rate profits of our wealth management business by the end of this year,” Walters said in his prepared remarks, according to a transcript by Seeking Alpha.
“In summary, our strategy is working,” he said. “And we are performing well against it, including meeting or exceeding most of our critical underlying operating metrics across the businesses, which gives us confidence that we are progressing more rapidly than planned in executing our sustainable growth strategy.”
To see the key takeaways for financial advisors and wealth management professionals from the company’s first-quarter results, scroll down our slideshow. For coverage of Avantax’s earnings in the prior period, click here.