View the article online at http://citywire.co.uk/wealth-manager/article/a722443
Brewin Dolphin's £4.8m redundancy cost weighs on profit
by Danielle Levy on Dec 04, 2013 at 07:58
The move to a unified pricing structure and the introduction of the retail distribution review in January weighed on the firm's advisory dealing and advisory managed services. The national wealth manager's execution-only arm prospered however, with assets up £1.3 billion representing a 24% increase on the year. Of this £900 million represented new inflows, while £700 million was transferred from advisory to execution-only, which the firm said had been as a result of a service review and move to standard pricing.
Move to new rate card
The board said a move to a unified pricing structure was progressing well, with around £20 billion of its assets now on the rate card. This has taken trail commission out of the business and allowed for a standardised yield across the services it offers. For example, the yield on advisory managed portfolios rose 0.1% to 0.56%, discretionary was up 0.5% to 0.96%, but advisory dealing was down 0.13% to 0.29%. Nonetheless, Brewin still needs to move 50% of advisory managed clients over to the structure in 2014.
The firm's discretionary business benefited from asset growth and improved yield, powering a 23% increase in income to £192.7 million. Despite lower levels of advisory managed assets, overall income rose by 18% due to the improved yield from repricing. Brewin put the decline in income from advisory dealing down to its service review and repricing initiative.
Brewin attributed the rise in fee income to growth in discretionary services and the ongoing introduction of fees to advisory clients. Income from financial planning also proved robust with growth of 26% to £11.7 million.
David Nicol, who came in as chief executive earlier in the year after a board reshuffle, commented: 'Our evolution must continue as we strive to become the leading provider of personal discretionary wealth management in the UK.'
The firm said it had reviewed the appointed representatives of the group as a result of its refocused strategy and concluded that the risks of self-employed agents providing advice under its brand, in return for half the commission they generated was an out-of-date approach and not in the best interests of clients. This resulted in several appointed representatives transferring their business elsewhere, with one becoming an employee over the year, the firm noted.
Another part of the firm's refocused strategy has been the development of new IT systems. Brewin said the first stage of its new core operating system had been implemented into Stocktrade, its execution-only service, in September 2013. It plans to roll out the new system out across the rest of the group during 2014 and implement new software to support investment management and financial planning services.
At 11:52 Brewin's share price was trading at 282.6p, up 2.24% on the day.
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