Rathbones is investing for organic growth in its first update since Tilney and Smith & Williamson announced they were merging to create a new rival for the business.
Assets under management inched up 1% over the quarter ended 30 September to £49.4bn.
Unit trusts brought in £319m worth of business but investors pulled £164m from the core investment management business. Rathbones attributed the outflows to weak investor sentiment and investment manager departures, which it expected to continue to weigh on net growth in FUMA into 2020.
Total net inflows over the period were £100m.
The FCA’s box profits ban hit income from unit trusts, which was largely flat year-on-year at £9.6m compared to £9.5m in 2018. Excluding box profits, income rose 8.9%.
New rival in Tilney Smith & Williamson
The difficulties faced by the investment management division comes as competition heats up in the space.
The £625m merger between Tilney and Smith & Williamson will create a new player to rival Rathbones, as well as Brewin Dolphin, with the combined wealth management business set to manage £45bn.
The transaction is expected to complete in early 2020.
Growth plans to hit Rathbones operating margins
Rathbones CEO Paul Stockton, who only took over in May from Philip Howell, will led an executive management presentation today outlining how he plans to leverage core strengths to create organic growth and improve productivity.
The Q3 trading update provided little detail but said operating margins will fall to “mid-twenties” in the two-to-three year plan. The underlying operating margin in the interim results for the period to the end of June were 27% compared to 31.5% a year earlier.
“In difficult markets we continue to focus on providing a quality service to our clients, navigating through ongoing market uncertainty but also selectively investing to pursue organic growth opportunities and develop our business,” Stockton said in the trading update.
