Charles Stanley’s £6m swing into the red

Michael Bow
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Boss Paul Abberley wants to reinvigorate the firm
Wealth management firm Charles Stanley started the arduous task of trying to turn around the business yesterday after revealing a £6m full year loss.

The company, which traces its roots back about 200 years, saw a £6.1m profit last year evaporate to a £6.1m loss for the year ending March 2015, due to higher staff and IT costs.

Chief executive Paul Abberley, the former boss of Aviva Investors, said higher bonuses paid to front office staff like fund managers at the group had helped increase group costs.

Bonuses at the firm, which has 1,050 staff, are tied to revenue, rather than group profits.

Investment in IT systems and costs associated with regulatory matters also chipped away at the firm’s revenues, which rose just one per cent to £149.7m.

However, Abberley, who took over as chief executive in December, said staff and shareholders were supportive of his efforts to take out some of those costs.

“We feel we are sitting on the starting grid and haven’t driven off yet,” he said, pointing to the activities of the firm’s rival wealth managers over the past year.

Underlying growth numbers were more encouraging, however. Discretionary funds under management grew 13.4 per cent. But net inflows as a percentage of assets rose just five per cent. Last year they increased 26 per cent and in 2013 rose 17 per cent.

Charles Stanley Direct, its online investment platform, added 20,000 accounts over the year with revenues rising 37.1 per cent.

“The company has strong foundations,” Abberley said. “But costs in the front office have risen faster than revenue.”

The group has sold its investment banking arm Charles Stanley Securities to Panmure Gordon for £1.5m and also agreed to sell its employee benefits division Charles Stanley Financial Solutions in a bid to focus on its core wealth management business.

Shares in the group fell two per cent yesterday. They are currently ten per cent below the price a year ago, in contrast to their closest rival Brooks McDonald, which has seen shares rise 17 per cent.

Larger wealth management firms like St James’s Place and Rathbone Brothers have also done well.

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