JM Finn’s pre-tax profit rose by 26.9% in 2017, but chairman James Edgedale has warned that wealth managers face ‘enormous disruption’ risks from technology and regulation.
The company reported pre-tax profit of £10.9 million for the calendar year, up from £8.6 million in 2016. This was on revenue of £64.8 million, which increased by 12.2% from £57.7 million. AUM rose 16% to £6.92 billion.
Administration expenses rose 8.8% over the year to £53.7 million and the firm paid a dividend of £3.3 million, up from £3.1 million in 2016.
Edgedale (pictured) described 2017 as a ‘year of projects’, pointing to it being the first full year of JM Finn’s financial planning service, which he believes will be a differentiator for the business.
‘It has become nearly impossible to obtain direct investment advice, without turning to a full discretionary service. Investors can make their own decisions easily and invest reasonably cheaply online or opt for a discretionary service, but if they want an advisory service, life has become extremely difficult and it is possible many of our competitors will no longer offer this.’
However, he warned that JM Finn and the wider industry will have to contend with potential disruptors.
‘Much has been written about the “disruption” caused by new technologies, which is clearly in evidence in many industries, whether it be the “Amazon effect” on traditional retailers or property companies. In our industry, regulation and technology have both caused enormous disruption to the way we have worked in the past,’ he said.
‘We have been beneficiaries of technology of late as we get help in coping with the regulatory changes brought about by Mifid II, but we must not underestimate politicians and regulators and the ever-increasing strictures and controls that will inevitably come into play in the future.’