The head of Charles Stanley has said the company can turn its attention to building a more holistic service now it has “cleared the deck” and moved back into profit.
In its latest results published today (24 November), Charles Stanley saw its profits reach £3.6m in the six months ending 30 September after making a loss of £300,000 in the previous financial year, and Paul Abberley said the firm’s reduction in costs was a “key driver” of this.
He said some of that is due to the strategic efforts to cut costs, but that an “awful lot” has come from the teams themselves.
“All of the teams now understand their own cost structures and they are spontaneously finding ways to save money.”
The Charles Stanley chief executive also said the firm has been growing revenue in core parts of the business: “The products and services which we deem to be the future of the company are beginning to show some encouraging growth.
“Overall these results are in line with what analysts expected and we think this trajectory is sustainable; over time we would expect this to accelerate as we grow the top-line revenue.
“A lot of the work over the past two years has been about restructuring the company, and – having cleared the decks – we can now turn our attention to growth.”
We felt the previous remuneration structure fell short in this regard Paul AbberleyThe discretionary fund manager saw pre-tax profits climb at a time when investment markets have struggled at the hands of the Brexit vote, and Mr Abberley said it was important to be unemotional when dealing with such a choppy environment.
“We have personal views on the EU referendum and the US election, but when you are managing other people’s money you have to be ‘quite cold’ and rational to see things with greater clarity.”
Mr Abberley said he wanted a “solid base” from which to build on, which was one of the reasons behind his decision to overhaul the pay structures for its wealth managers.
He also said he wanted an alignment of interest between the company and shareholders, adding: “We felt the previous remuneration structure fell short in this regard.”
Charles Stanley has spent two years trying to come to an agreement with all the different investment teams, which he admitted has been “time-consuming”.
“Clearly it’s important to get it right and it has taken a long time, but it has been time well spent in that it’s something everyone has agreed on, rather than trying to impose something.”
While 90 per cent of the investment managers agreed to the new structure, Mr Abberley said the firm is still in talks with the remaining 10 per cent.
“I set out with the intention that everyone would fall under this new structure; we have not achieved that, but we are still in conversation with the teams that have not yet moved over.
“The fact that 90 per cent have signed up to this arrangement is a clear indication that they are committed to the future of the firm, and I would be very surprised if there is attrition in the time ahead.”
Mr Abberley said Charles Stanley plans to take on more advisers for the firm’s financial planning arm over the next year, and “materially increase” numbers over the long-term.
“We want to be better resourced to provide that financial advice, so we are investing in that area,” he said, adding the advisers would either provide ad-hoc advice or a full plan.
But he disputed whether IFAs should feel threatened by the move: “We are using the advisers to work with the existing clients where the investment manager isn’t qualified to offer the advice.
“We are also taking on new clients for financial planning, but I don’t think the scale of what we were doing is going to be in any way threatening to the advice industry.”
Mr Abberley also said the firm will be launching four risk-rated open-ended funds early next year, which are suited to people who don’t have enough assets for a hand-built portfolio.
