Adviser firm Saunderson House's parent company fell into the red as it faced £8.8m of costs to address legacy problems related to "the administration and documentation of advice".
IFG Group posted a loss before tax of £400,000 for 2017, compared to a profit of £6.4m for the previous year.
The company's revenues remained flat at £78.4m - almost exactly the same as its revenues for 2016.
Assets under administration and advice grew by 15 per cent to £30.6bn and IFG Group's two businesses - James Hay and Saunderson House - added more than 6,300 new clients.
But IFG Group faced costs of £8.8m for remediation, legal costs and for the provision of client redress because of legacy matters relating to the administration and documentation of advice.
Saunderson House is IFG's only adviser business.
John Cotter, IFG Group's chief executive, said: "The legacy issues, some of which have come to light as we make changes and improvements to our businesses, have resulted in materially increased exceptional costs, but we believe that identifying all legacy issues and bringing them to closure, will better position our two businesses to focus on sustainable growth and improving profitability going forward.
"Resolving these legacy issues is the priority to allow the businesses to move forward and focus on achieving their potential, free of legacy risk."
Mr Cotter said the impact of costs arising from its sale of Elysian Fuels investments via the James Hay self-invested personal pension - IFG also owns James Hay - was at most £20m and said the company is still in talks with HM Revenue & Customs over this issue.
Once the exceptional costs were removed, IFG Group said it made an increased profit of £10.5m.
Earlier this year IFG Group put Saunderson House, its financial advice business, up for sale after receiving a number of offers.
This morning Mr Cotter said discussions over these offers are still ongoing but he would only proceed with a sale if it would create "greater shareholder value".
Over the course of 2017 James Hay saw net inflows of £3.4bn, with assets under administration increasing by 15 per cent to £25.5bn.
Meanwhile Saunderson House saw its assets under advice grow by 11 per cent to £5.1bn, with its discretionary management product growing "ahead of expectations".
damian.fantato@ft.com
