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Wealth management company Brewin Dolphin is launching two new advice services, one aimed at the mass market and one at more “sophisticated” clients, putting it in direct competition with the independent financial advisers who have been key to its growth.
At the presentation of its full-year results on Wednesday, the FTSE 250 company said that next year it will expand WealthPilot, a low-cost advice service delivered by Skype or face-to face, having tested it in London this year.
It also plans to target clients with “more complex needs” via a small office in the West End of London.
Brewin is continuing to move away from traditional stock broking towards higher margin “discretionary” wealth management, where customers hand over full control of their money, often via a financial adviser.
Over the year, Brewin expanded its discretionary funds under management by 17.4 per cent to £33.8bn. Funds under management for new discretionary customers rose 8 per cent over the year, well ahead of the company’s 5 per cent target. Third party referrals, the majority of them from financial advisers, have driven 90 per cent of net new fund growth.
The total Brewin manages for clients is now £40.1bn.
Analyst Paul McGinnis at Shore Capital said: “Brewin will need to be careful how to pitch [its advice services] while continuing to develop relationships with the third party intermediary sector, a key driver of net new business.
“Discretionary managers have to be careful about treading on the toes of third party advisers.”
However, he added that the new services would be relatively small to start with, reducing concerns about competition with financial advisers.
Brewin reported a 15 per cent increase in pre-tax profits to £57.6m over the year, up from £50.1m the previous year.
Income from the core parts of its business, which includes investment management and financial planning, grew 10.5 per cent to £291m.
The group also improved profit margin to 23 per cent, up from 21.6 per cent at the end of September 2016.
Its full-year dividend increased 15.4 per cent to 15p, and its final dividend rose 17.5 per cent to 10.75p.
Chief executive David Nicol said changing rules and government policy towards advice meant the company needed to “capitalise on the opportunities these market changes will bring, and in so doing, achieve a higher future market share”.
He said the new advices services were “still at an early stage” and involved “modest additional investment in the form of initial staffing and training costs, as well as some separate office space in central London”.