Brooks boss: Turning point in numbers was first half of year
In its annual results out today (September 16), Brooks Macdonald reported group funds under management had reached a “record level” of £16.5bn at the end of June 2021, up 20.3 per cent on the same period last year.
Pre-tax profits were up 33 per cent, from £23m to £30.6m, while revenue was up 8.8 per cent, from £108.6m to £118.2m.
This comes after Brooks reported £261m net outflows in October as investors withdrew cash from all of its services except its international proposition.
It followed a rocky financial year to June 2020 in which investors pulled £774m of cash from both its discretionary and funds arms.
Speaking to FTAdviser this morning, newly-appointed chief executive Andrew Shepherd said he was “fortunate” to deliver the set of results, just four months in and on the firm’s 30th anniversary month.
He said: “There's a turning point in the actual numbers, which is in the first half of this year, but I think that probably doesn't tell the true story.
"It's been a number of years of hard work of putting in place the necessary foundations for us to grow, putting in place the right product set, building the culture of the business and the right people to be able to deliver.”
The firm reported assets of £15.5bn at the end of December 2020, up from £13.7bn in June 2020 and £13.1bn in December 2019.
Shepherd said: “I'm not sure I can put an actual date on it but we have seen a lot of changes in the marketplace over the last decade, and I've been here for nearly 20 years now and working with intermediaries in the UK for 20 years and you will be well aware that RDR changed everything.
“But in the eight years since RDR, the requirements of the intermediary space have changed significantly as well and we've had to change with it.”
Shepherd said the product suite it has been building for the last few years was also generating traction.
“It’s taken effort, developing ESG solutions, developing other bespoke solutions for clients, ensuring our model solutions through MPS and particularly now MPS on platforms, was fit for purpose,” he said.
“This stuff doesn't happen overnight and so yes, we turned a corner and momentum is behind us and in that last year, in each of the four quarters we improved net flow position, and at the start of this year it's looking pretty good as well.
“But that's all part of the journey, we've got a long way to go and digital transformation is part of that, making sure that we continue building the relationships that we've got, and through individual relationships but also corporate relationships through our B2B investment solutions service.
"All of these things create momentum, and we've got that momentum now which is a happy place to be.”
However, Shepherd noted the success was a joint effort and thanked the staff for being “magnificent”.
“It’s not a one or two man thing, it's a 450 person thing and we are judged on how we deal with adversity and how we interact with our clients, with our intermediaries, partners and indeed with with each other and the way that [our staff] dealt with everybody in a virtual world, even when tough things are going on in their own families, [they] have been great.”
Digital transformation
Last September, Brooks Macdonald pledged to transform the adviser experience in the next stage of its strategy as it looks to upgrade its digital offering.
Speaking to FTAdviser today, Shepherd said the digital onboarding roll out phase was in place now and the firm has been rolling it out internally with selected advisers, with it expected to go to the full market soon.
He said: “From a digital onboarding perspective, the transformation comes in a number of parts and a number of phases but from a digital transformation perspective, onboarding genuinely is a game changer in wealth management.
“We're talking about moving from completing trees worth of paperwork over a number of hours to a number of minutes on an app sitting next to your adviser in the comfort of your own home with digital signatures.
“At the moment, it probably feels to clients and advisers like a bit of an onerous process and it will feel like something which is the modern world.
"But once done, it won’t feel like an onerous process and it's going to save advisers significant time, since they can deal with more clients and be more efficient in their businesses, and they won't have to persuade clients to fill out reams and reams of paper.”
As well as the onboarding, Brooks Macdonald is transforming the digital side of its portal, which Shepherd said will be “leading in terms of the peer group”.
Acquisition plans
In June last year, Brooks set out to take over Lloyds Bank International’s offshore wealth management and funds businesses for the best part of £10m, while entering a referral agreement with Lloyds.
Discussing the acquisition plans for the future, Shepherd said: "We have three main criteria for any acquisitions. One is that they add strategic value. The second is to bring economic benefit to the business and the third is that there's a good cultural fit.
“What we have seen in Cornelian and Lloyds is that we've ticked all three of those boxes.
"They've been better for us financially than we thought that they would be, the strategic value has been enormous but to me, the biggest key is that culturally, the businesses have really fit together. We've brought on some fantastic people through both of those acquisitions and added to the skill sets that we have within the business.
“That's the criteria that we have, we continue to talk to firms, and as and when those three criteria fit, then we'll continue with M&A. But if it's not right and we don't see the right thing, then we won't undertake it.”
He said the firm did not have a number in place when seeking acquisitions, but said the plan was based upon “organic growth”.
“If the right fit turns up in terms of an acquisition, then we'll add it into the plan, but it's really dependent upon the right fit, turning up at the right time.”
sonia.rach@ft.com
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