Mattioli Woods staff cuts draw comparisons with Brooks Macdonald

Fee pressure and rise of robo-advisers squeezes wealth managers

Mattioli Woods

Mattioli Woods has revealed it cut 18 jobs from its staff in its latest interim results drawing comparisons with Brooks Macdonald’s staff cull a month ago.

In its interim results for the six months ended 30 November 2018, Mattioli said the redundancies were because the lease on its Hampton-in-Arden office expiring in June 2019 and the proximity of this location to Leicester. Its total headcount fell from 622 to 604 over the period.

The wealth manager reported that revenue grew 2.8% to £29.9m, up 2.8% on a year ago, adjusted pre-tax profit increased 8.3% to £6.5m, up from £6m and total client assets rose by 0.7% to £8.79bn. Gross discretionary assets under management were also up 0.9% to £2.36bn, from £2.34bn on 31 May 2018.

Cost scrutiny, robo advisers and retirement offerings

Portfolio Adviser spoke with several people who highlighted cost pressures and competition in the wealth management industry and drew comparisons with Brooks Macdonalds, which cut 50 staff last month.

“So-called wealth managers have tended to be the least transparent yet most expensive players. That can’t last,” said Clive Waller, managing director at CWC Research. “Charges have been an issue for some years, hence the drive to passive. Now regulators have joined the party. When we talk to asset managers, Mifid II is their biggest concern. It’s about absolute cost and transparency of cost.

Fintech, whether full robo or hybrid, was also driving job losses, with US investors able to access funds and advice for about 34 basis points, including a platform fee, Waller said, adding that would be a “ rounding error in the UK”.

“All players are going to have to focus on exactly where they add real value and use efficiencies and tech to drive down all other costs. This will ensure firms look at head count.

Meanwhile, Heather Hopkins, managing director at NextWealth said outsourcing to DFMs has levelled off due to a few factors. “Costs are being scrutinised more as a result of increased transparency on fund charges and also as a result of weaker markets. Also, advisers tell us that DFMs are no well set up to support portfolios for retired clients.

“This, combined with weaker markets and growing regulatory costs, is putting pressure on DFMs. We think the trend will reverse as DFMs innovate heir offerings for retired clients.”

Mattioli eyes further acquisitions

In the results, Mattioli Woods said it was targeting acquisitions despite market turmoil.

It highlighted the positive contribution from Broughtons Financial Planning, acquired last August, as well as an increased share of profit from Amati, whose total funds under management had increased to £337.3m.

Ian Mattioli, chief executive officer, said while Brexit uncertainty remains it will continue to affect markets and consumer confidence.

Mattioli said: “Although there is some caution around markets, we believe the group is well placed to secure further growth, both organically and by acquisition, and further consolidation within our core markets remains likely.”

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