Brooks Macdonald has reported 45% growth in discretionary funds under management for the year to June, but warned the costs of investing in the business will drag on margins in 2014.
In a trading update covering the full year to 30 June, the wealth manager reported discretionary funds climbed to £5.11bn, from £3.52bn on 30 June 2012. This is an increase of 45% over the year, or 25.6% excluding the acquisition of Spearpoint, which had AUM of £329m at the end of the year.
Discretionary FUM taken on as part of the Spearpoint acquisition totalled £686m (£601m in portfolios and £85m in funds). At year end this totalled £650m.
Advisory funds under management (formerly managed by Spearpoint) totalled £348m, down from £357m at the end of December 2012.
Brooks Macdonald’s property arm, Braemar Estates, had AUM of £1.04bn at year end, a 20% increase from the £865m held last year.
A recently launched investment management administration service has raised £140m of third party assets since it came to market in April 2012.
Brooks said it is planning for continued organic growth and the launch of new funds, and has been taking steps including upgrading its systems to prepare for this.
Pre-RDR, it has already brought fees on its Managed Portfolio Service in line with new and existing funds. The wealth manager reported a “significant increase” in compliance and regulatory costs as a result of RDR. These costs combined will be felt as a drag on margins in next year's results, the group predicted.
The group said: “The board believes continued investment is necessary to properly manage a business of our scale, mindful of its continued trajectory for organic growth and expects the group to benefit from such investment over the medium to longer term. In the year ending June 2014, however, there will be an adverse impact on our margins due to these initiatives.
Chris Macdonald (pictured), chief executive, said: “The last year has been very active, with the successful acquisition and integration of Spearpoint, strong organic growth, the launch of new funds and significant investment across the business.
“We anticipate making further progress in maintaining this organic growth of funds under management in the new financial year and the board remains confident for the future prospects of the group.”
£1bn business since inception
Considered doing so in 2015
Client communication considerations
Aviva: ‘We are sorry’
FOI from Professional Adviser