IT and legacy issues dent Brooks Macdonald profits

IT and legacy issues dent Brooks Macdonald profits

The cost of an IT upgrade and dealing with legacy client issues dented profits at wealth manager Brooks Macdonald.

Underlying profit was 6.1 per cent higher, at £18m, but the costs of remedying legacy issues with a number of discretionary portfolios managed by Spearpoint, a business it bought in 2012, were £5.5m.

The cost of replacing IT systems was a one-off £2.5mm which further dented statutory profits.

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This meant that for the 12 months to the end of June 2018 the company posted a profit before tax of £6.7m, down 16 per cent from the previous year.

Ben Thorpe, group finance director at Brooks Macdonald, said the amount the firm had to commit to legacy issues should reduce in the coming year.   

Total funds under management rose to £12.4bn, with the Defensive Capital fund growing to £500m. Total revenue was above £100m for the first time.

Caroline Connellan, presenting the first set of full year results since she took the helm of the business, said two areas she was targeting for growth in the year ahead were sustainable investment products and vulnerable protection clients, such as those who have received lump sum settlements for injuries and need to invest the capital for their care.

Ms Connellan said the firm’s focus on sustainable investment products is the result of increasing levels of interest from clients.

She added that the firm is not "actively" looking to make acquisitions.

Ms Connellan added: "Looking ahead, we recognise we have more to do, and our focus is now turning to ensuring we are easy to do business with and to achieving higher profit margins in the medium term."