Companies  

‘Clients will pick up the costs of RDR compliance’

The chief executive of alternative investment market-listed wealth management group Brooks Macdonald said the increased costs would eventually have to be passed on to clients.

Speaking as the firm announced its yearly results, including an increase in profit of 22 per cent and a growth in total funds under management of 45 per cent, he said: “The last year has been one of considerable progress, but also of change.

“RDR, something that we supported, led to changes across the whole industry and to a continued rise in regulatory costs.”

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Mr Macdonald said the increase in costs, in addition to investments in staff and infrastructure, would lead to an adverse effect on the group’s margins during the present financial year.

He added that while the costs had not yet been passed on to customers, it was a matter that the “whole industry will have to consider” in the coming years.

Key points:

• Statutory pre-tax profit up 22 per cent to £10.4m.

• Revenue up 47 per cent to £13.2m.

• Total funds under management up 45 per cent to £5.11bn.

Background

Preparing for RDR has also led to higher costs for other advisory firms, including Openwork which revealed last October that it spent £7m to become RDR-ready, while Positive Solutions only remained in the black last year partly by imposing strict cost-cutting controls.