charles stanleys discretionary service

Charles Stanley saw funds under management and administration rise by 6% in the year to the end of March, even as profits fell, with its discretionary management service doing particularly well to attract assets.

charles stanleys discretionary service


Funds under discretionary management were up 9% from £4.61bn to £5.02bn and clients’ discretionary funds now represent almost two-thirds (64.7%) of total managed funds, compared to 64% a year earlier and 61.2% the year before that.

The firm said the increase in funds under management was made up of market performance averaging 0.6% across clients’ portfolios and 7.2% in net incoming funds.

This compares with a decline in the FTSE 100 index of 2.4% over the same period of time and an increase of 0.5% in the Apcims Balanced Portfolio Index – its principal benchmark – the firm added.

Profit decline

Despite the increase in funds under management, the company reported a 37% decrease in pre-tax profits to £8.5bn, from £13.4bn in 2011. This has worsened since the firm’s half-year results when it reported a 29% decline in pre-tax profit.

Charles Stanley blamed this on the economic conditions which have "retreated back into recession at home" and seen uncertainty re-doubled in Europe.

"This severely affected the propensity of our clients to undertake stock exchange transactions and in January of this year we announced a sharp decline in commission income in our third quarter to 31 December. The downturn has continued, but less aggressively, into our fourth quarter, from January to March this year," said David Howard, chairman of the company.

Meanwhile fee income has continued to improve significantly, with a 12% increase in fee income for investment management and a 7% increase in income from administrative fees, which Charles Stanley said had gone a long way to mitigating the decline in commission income arising from clients’ transactions (or lack thereof).

FSCS hit

Pre-tax profit has also been impacted by the £1.6m paid by the firm into the financial services compensation scheme, although this was down from £2.6m in 2010-11.

"It was to be expected that increasingly aggressive regulatory oversight and intervention in the investment industry would follow in the wake of the economic and market failure, which has stalked the global economy since 2008.

"This intense regulatory pressure across the financial services sector places a great burden on our resources, both financially and in the diversion of management resources. But there is little evidence the increasingly intrusive and burdensome micro-management of investment companies has been successful in staving off some egregious examples of fraud and mismanagement, the cost of which is spread across shareholders in financial services companies," Howard concluded.


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