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Close Bros' vertical integration ups fund margins 12%

Close Bros' vertical integration ups fund margins 12%

Close Brothers’ assets management division increased its net revenue margin from 86 basis points to 96bp as it sold off some of its lower margin units to focus on retail advice and fund services.

The near 12% increase was accompanied by a 10% increase in operating expenses however, primarily driven by staffing costs 12% higher, as the business both purchased and hired IFA talent.

Combined with a sharp increase in client funds on the back of new clients and the following wind of booming stock markets, the business returned a £17.4 million profit in the year to end June, up from £14.4 million in the prior year.

The company has quietly reconfigured its asset management division over the past 12 months, selling OLIM Investment Management and buying regional advisers EOS Wealth Management and Adrian Smith & Partners.

It has also hired a series of senior staff from rivals and targeted gaps in its national network.

Advised assets within the division rose 22% in the year to £2.3 billion while total client assets rose 13% from £9.9 billion to £11.2 billion, with net inflows 49% higher at £757 million.

Wealth managers and advisers in the division have also been shifted onto a new combined IT system.

‘We successfully completed the migration of client accounts onto a single technology platform, which allows us to consolidate custody, trading and administration, improve client experience and create operating efficiencies,’ the company said in a statement. 

‘In addition, we are looking at ways to optimise our adviser productivity, while continuing to provide excellent service to our clients.’

Group wide the merchant bank reported a 13% increase in operating profit to £264.8 million, primarily driven by a 24% increase in profits at its property finance division to, with banking profit up 9% to £243.5 million.

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