Record funds under management at Rathbone Brothers

Liverpool wealth management group Rathbone Brothers achieved a record £49.2bn of funds under management and administration, it said today.

Reporting its interim results for the six months to June 30, the Port of Liverpool Building-based business also revealed a drop in pre-tax profits for the period, from £43.7m to £20m for this year.

However, the firm said this reflected a number of expected items, primarily in relation to the acquisition of Speirs & Jeffrey. Costs in relation to this totalled £17.8m in the half year, compared with costs of just £600,000 a year ago.

Speirs & Jeffrey is the largest acquisition Rathbones has undertaken to date and, following a successful migration project, the firm transferred £6.5bn, or 96% of funds under management and administration, over to Rathbones’ systems this month.

It said this achievement was possible thanks to careful planning, involving more than 30 work streams covering all aspects of the business.

Total funds under management of £49.2bn, up 11.6% compared with £44.1bn at December 31, 2018, and £39.9bn a year ago,

In contrast, the FTSE 100 Index and MSCI WMA Private Investor Balanced Index increased 10.4% and 9.9%, respectively, over the six-month period to 30 June 2019.

Rathbones said today that it is increasing its interim dividend, in line with its progressive dividend policy, by 4.2% to 25p, compared with 24p last year.

It said: “This increase reflects our confidence in our medium term prospects and the strength of our balance sheet.”

Today’s statement added: “It has been nearly three months since Paul Stockton took over as chief executive, having been group finance director for over a decade.

“Jennifer Mathias took over the group finance director role on 1 April 2019. The business has grown considerably in recent years so the change in leadership presents an opportunity to identify how different areas of the business can develop further.”

It revealed that, following an ongoing review, it has begun to implement some changes which will both help enlarge the Rathbones footprint with external financial advisers and support business development more widely.

First, in order to broaden industry reach with financial advisers, the firm is adding specialist roles to its financial intermediary distribution team to focus entirely on introducing its discretionary fund management proposition to that community.

Secondly, Rathbones has appointed a head of client development to act as a focal point for all business development activity in the non-intermediated channel.

This will include offshore investment services, but also a UHNW (ultra-high net worth) team (formerly the Rathbone Private Office) that will now concentrate on introducing UHNW clients to existing Rathbone investment teams rather than promoting its own advisory proposition.

It added: “The changes will provide a renewed focus on business development skills, building out and maintaining pipelines and nurturing internal client opportunities. We plan to share our strategic plans with the market in more detail in October 2019.”

Chief executive Paul Stockton said: “It has been a busy first half for Rathbones as we successfully migrated our largest acquisition to date, underwent a smooth leadership transition and posted the highest funds under management and administration in our history.

“Investment markets look likely to remain volatile in the second half but we retain a cautiously optimistic outlook.”

He added: “The UK wealth industry continues to present positive opportunities for future growth which we will actively pursue.”

Nik Lysiuk, equity research analyst at London stockbroker finnCap Group, said: “For me, the danger here is the total committal to discretionary services.

“In any downturn I’d bet that clients want access to advisory services to help them through the tough times, but Rathbones are moving S&J out of advisory and into DFM.

“Shares hit a 28p peak two years ago and have been trending down recently. Perhaps the company will look for another acquisition should they see S&J as being an outright success.”