Mifid II and low fees help boost Tatton assets by 25%

CEO touts 0.15% fee where others charge up to 2%

Tatton

Pressure on advisers from Mifid II and being able to offer “competitive” pricing helped Tatton Asset Management’s assets under management (AUM) swell 24.5% last year, its chief executive has said.

On Monday the Aim-listed discretionary fund manager reported its interim results for the year ending 31 March which revealed net inflows of £1.1bn to take its AUM to £6.1bn, up from £4.9bn in 2018.

Tatton Asset Management chief executive Paul Hogarth (pictured) told Portfolio Adviser inflows had been driven by a number of “tailwinds”, including the pressure placed on advisers running model portfolios by Mifid II and the fact that it is able to undercut its rivals on fees.

He said:If you are running advisory model portfolios under Mifid II now it is a full piece of advice and gets very cumbersome for an IFA practice.”

Hogarth said at 15 basis points (bps), Tatton is considerably cheaper than rival firms where he sees fees of 75bps through to 200bps before adviser agreed remuneration has been added.

Others are hamstrung because they have been around a long time, they have been receiving fees on full margins and it is more difficult for them to compete at the level we can,” he said.

Hogarth pointed to the fact that Tatton is profitable at the price it offers IFAs. The results revealed group revenue increased 12.9% to £17.5m, up from £15.5m in 2018, and adjusted operating profit up of £7.3m, up from £6.5m in 2018.

Tatton increased its member firms by 30.5% during the year to 445 and the number of accounts reached 58,500, up from 48,800 in 2018.

Two DFM mandates

Tatton Asset Management also announced it has been awarded two discretionary fund management mandates from two separate IFA groups.

Frenkel Topping, an Aim-listed specialist independent financial adviser and asset manager focused on asset protection for vulnerable clients, has appointed Tatton as investment manager for its DFM Ascencia Investment Management on an initial three-year term.

Separately, Tatton has been appointed by Tenet Group, one of the UK’s largest financial adviser groups, to provide a model portfolio service for its appointed representatives and directly authorised firms.

Hogarth said it is unclear as to how the mandates will affect Tatton’s AUM because with Tenet, it is down to its underlying IFA businesses whether they want to transfer assets, and with Frenkel Topping, it is up to Ascencia as to how much it wants to transfer to Tatton.

Hogarth added: “We are excited about both, but there is a lot of work that needs to go on now to move those assets forward. If you’d have asked me what I wanted to Christmas, I’d have taken that Tenet deal.”

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