Fund inflows swelled to the highest total on record at wealth manager Brewin Dolphin in the past year, buoyed by a combination of positive net flows and strong investment performance.
The London-listed firm drew in a record £4bn of discretionary inflows in the year to the end of September, compared to £2.8bn in the previous year.
It also pulled in discretionary net flows of £1.9bn, up from £0.9bn last year, and representing an annualised growth rate of 4.6 per cent.
Of this total, Brewin Dolphin attracted £0.5bn from direct clients and £1.4bn from indirect clients, of which £1bn flowed into its MPS solution and multi-asset Voyager fund range.
“Independent financial advisers are outsourcing to us, and most of them are small businesses,” CEO Robin Beer told city AM.
“The convenience our platform provides for them to invest in their clients drove this strong performance,” Beer said.
These strong net flows, combined with a robust investment performance, pushed total funds up 19.5 per cent during the year to £56.9bn, and total discretionary funds jumped 20.9 per cent to £49.8bn
Total income for the period increased by 12.3 per cent to £405.9m, up from £361.4m last year, which the wealth manager said was driven by strong market performance, combined with its record fund inflows.
As a result, profits before tax surged over 16 per cent to £72.5m, up from £62.1m in the same period last year, and the final dividend per share rose 12.1 per cent to 11.1p, taking the total to 15.7p per share.
Looking ahead, the wealth manager said it expected next year’s commission income expected to be similar to this year’s, and that it would invest around £26m on operating technology, which it said would drive cost benefits of around £1m next year, rising to £10m in FY 2023.
Operating costs are expected to grow mid to high single digit per cent, which the firm said was due to a combination of wage inflation and this technology investment.
“From a client perspective, inflation around the corner is our friend,” Beer told City AM.
“People are going to be worrying about how it will erode their pandemic savings, and in turn will come to us for advice on how to generate long-term gains.”
“But from a corporate perspective, higher wage inflation in some sectors of the market means we need to compete to retain our talent.”
The firm’s new digital custody and settlement system, is expected to complete in summer 2022, and will represent the “final piece in the jigsaw” for the Brewin Dolphin’s digital platform transition, Beer said.
“On completion […] we expect to capture significant synergies and benefits across the business, supporting our vision to deliver double digit earnings per share growth by 2025,” Beer added.
Analysts at Liberum view the group’s advice-led offering as a “key competitive advantage” that will draw in clients and serve as a “more defensive source of earnings”.
“Reflecting this strategic focus, we expect Brewin to continue to win market share and outperform its peers, independent of market conditions,” they said.
The group’s shares were down 7 per cent in early trading, after it warned that market volatility could lie ahead as Covid-19 support measures wind down and consumer demand reverts to normal levels.