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Fairstone sees funds grow in 2017

Fairstone sees funds grow in 2017

Fairstone has made improvements in its funds under management and advised capital over the first half of 2017, its latest results show.

In the six month period, the advice firm saw funds under management increase by £0.7bn to £4.7bn and funds under advice rise to £7.4bn, an increase of £0.4bn.

The company’s revenue increased by 49 per cent, an increase in turnover of £13.9m to around £50m when compared with the same period in 2016.

Meanwhile Fairstone’s earnings before interest, tax, depreciation and amortisation were £1.2m more than the previous year and is expected to reach more than £2m by the end of 2017.

Lee Hartley, chief executive of Fairstone, said: “The growth once again is largely achieved by significant traction in our proprietary downstream buy-out programme, with a series of deals with partner firms completed within this reporting period.

“The downstream buy-out proposition continues to gain in popularity, particularly among target firms who place significant importance on ensuring that positive customer outcomes are realised as a result of our non-vertically integrated model.”

The downstream buy-out model sees Fairstone take an initial minority stake in an IFA business and integrate the firm over a number of years.

So far two businesses have been bought by Fairstone in this way during 2017 with another four in the pipeline.

In addition to the six downstream buy-out deals secured this year so far, a further five are at head of terms stage.

Fairstone currently has 300 advisers, 41,000 clients and a revenue per adviser of £175,000.

Most of its revenue – 72 per cent – comes from pensions and investment work while 28 per cent comes from corporate advice, property finance and insurance.

Mr Hartley said: “Fairstone is exceptionally well placed to take advantage of the recent regulatory changes within the markets in which it operates.

"The Retail Distribution Review, the Mortgage Market Review, the recent pensions freedom legislation and workplace pensions obligations all provide a very exciting backdrop to our business plan.

“However, Fairstone remains cautious over defined benefit scheme transfers with only 30 per cent of client requests being deemed in their best interests.

"This, together with our proven business model and the significant funding we have at our disposal, allows the management team and shareholders to look forward to 2018 and beyond with a high degree of confidence."

damian.fantato@ft.com

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