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Brewin's profits surge by 20%, but MPS flows slow

Brewin's profits surge by 20%, but MPS flows slow

Brewin Dolphin reported pre-tax profit rose 20.1% over the six months to the end of March, buoyed by £1.3 billion of net new inflows into its discretionary funds.

Although this equated to just a 1.5% assets under management (AUM) rise to £34.3 billion, the group said it grows to a 7.7% annualised fund flows rate.

However, total AUM stood at £39.7 billion at the end of March, up from £37.8 billion this time last year, but down from £40.1 billion at the start of 2018. Brewin said overall, total net funds flows of £0.9 billion over the six months were offset by lower investment returns in the March sell-off, although its AUM has since risen to around £41 billion by the end of April, aided by the market rebound.

Revenue rose by 9.8% to £161.8 million.

Net inflows into Brewin’s direct discretionary service doubled to £0.4 billion year-on-year and over 17% of these direct private clients now use the firm’s financial planning and investment management services.

The intermediary service attracted £0.9 billion, with net inflows into its bespoke discretionary service up 50% to £0.6 billion, representing a slight shift away from its managed portfolio service (MPS). 

The AUM in its MPS increased by 13% from £2.3 billion to £2.6 billion, which although healthy, is down from the 44% growth seen over the last 12 months. The company also added that it has now fully transitioned its MPS into a manager of managers structure.

The IFA team also saw average new case sizes increase by 22%.

Advisory funds fell by £1.1 billion to £1.6 billion over the period, with £0.9 billion of this transferred into other services within the group, including £0.6 billion into direct discretionary from advisory managed.

In an update on the impact of the May 2017 acquisition of Duncan Lawrie Asset Management, the group said it contributed £3.1 million of income in the six months to the end of March and contributed adjusted pre-tax profit of £2.1 million after costs, but the impact on statutory pre-tax profit was a £0.3 million loss after the cost of incentivisation awards and amortisation costs.  

Looking forward, Brewin highlighted the upcoming opening of a new West End office in the capital and said it has ‘made progress’ on its new simplified wealth planning and investment advice service, WealthPilot.

Meanwhile, the second cohort of 12 entrants is set to join its financial planning academy and it has also launched a senior level apprenticeship programme, the Cranfield executive MBA, and accepted its first intake into the two-year programme in April.

Brewin chief executive David Nicol (pictured) said: ‘We remain confident in the prospects for long-term growth for the group, which have once again been clearly demonstrated by continued positive momentum on all fronts, despite recent market volatility.

‘We remain confident in the strength and increasing relevance of our advice-led service and committed to ensuring that we have skilled and engaged people providing high quality advice as part of a close client relationship. To that end, we believe that the business is on track as we continue to deliver our organic growth strategy.’


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