Rathbone Brothers Within Reach Of £40bn FUM As Five-year Plan Nears End

The group's total FUM rose by 14.3% over the year to 31 December, during which time the FTSE 100 index climbed 7.6% and the MSCI WMA Private Investor Balanced index was up 7.2%.

This means Rathbone Brothers is well on its way to achieving its goal of reaching £40bn by the end of 2018, a mission that was set out during its five-year strategy put together in 2014.

Rathbone's unit trust inflows double in Q3

Mark Nicholls, chairman of the group, said: "Accepting that investment markets have been favourable, we are now well within sight of that goal with many of our strategic initiatives continuing to gain momentum.

"Over the next few months, the board and executive team will work to refresh our strategy to ensure our core business remains robust and that we can benefit from the changing landscape of our industry."

Meanwhile FUM in the unit trusts division was up to £5.3bn from £4bn a year prior, and net inflows totalled just under £90m. Underlying operating income was up 26% to £31.4m.

The investment management division also increased by £1.2bn, a rise of 3.9%, just behind the 4.5% figure the previous year.

Underlying operating income rose by 12.5% to £255m largely driven by higher investment markets and continued organic and acquired growth in all business areas. 

Last year Rathbone Brothers entered exclusive talks with Smith & Williamson (S&W) over a possible all-share merger, which would have created a financial services group with around £56bn in AUM and advice. However, However plans fell through as S&W decided to explore a potential stock market listing instead.

Nicholls said: "The benefits to both parties and our respective clients could have been considerable but, following extensive discussions, we were unable to conclude a transaction that was in the best interests of both parties.

"Nevertheless, I believe that our measured approach to this opportunity served us well. We will continue to apply this discipline when we pursue other opportunities."

Commenting on its outlook for 2018, Nicholls said the group is well positioned to provide long-term value for shareholders.

Chief executive Philip Howell added: "This year has presented many challenges and opportunities and I fully expect 2018 to do so in equal measure.

"Brexit continues to be a regular discussion topic within the investment community, but as a predominantly UK-based firm our own view is largely focused on the wider economic environment and any impact it may have on the investments we make for our clients."

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The group said it plans to continue its IT change programme inplemented last year which should add approximately £2.5m to its cost base. It also also intends to expand the footprint of its financial planning service across more regional offices throughout 2018.

Rathbone Brothers also reiterated its decision to no longer charge research costs to the funds within its unit trusts business, in response to MiFID II regulation which was implemented at the start of this year.