Uncertain times good for wealth managers

INFLATION MEANS CUSTOMERS LOOK TO INVEST

THE uncertain economic outlook will be good for business, a wealth management specialist believes.

Mattioli Woods said revenues were up 70 per cent last year, on the back of big acquisitions and strong organic revenue growth of 10 per cent.

The Leicester business said it was seeing more clients coming to it for help, with assets under management up 25 per cent to £5.1 billion in the year to May 31.

In an update, the business said trading was ahead of management expectations, though inflation was expected to have an impact on profit margin over the near term.

Chief executive Ian Mattioli said: “The last financial year was another period of economic and market uncertainty, throughout which we remained true to our purpose of putting clients first.

“I am pleased to report this focus has delivered strong revenue and profit growth, representing meaningful progress towards our ambitious strategic goals.

“Revenue was up over 70 per cent on the prior year, reflecting the contribution of acquisitions and double-digit organic growth, with the increased levels of new business written and a strong pipeline of new business inquiries offsetting the impact of negative market movements on the value of client assets.

“Acquisitions completed during the year, together with those completed in the prior year, continue to trade ahead of our initial expectations, including the group’s two largest acquisitions to date, of Maven Capital Partners and Ludlow Wealth Management.

“We expect the challenging macroeconomic conditions to drive an increasing demand for advice from clients, which will underpin growth in pensions and advice business.

“Like the rest of the UK wealth management sector, we expect market movements in the first half of this calendar year to negatively impact the group’s investment-related revenues relative to our expectations prior to Russia’s invasion of Ukraine, partially mitigating some of the anticipated revenue gains in our pensions and advisory business.

“However, the spectre of rising inflation typically creates an opportunity for further investment inflows as existing and prospective clients consider appropriately investing surplus cash to avoid suffering an erosion in value of savings.

“Despite ongoing management actions to mitigate costs, we expect inflationary pressures to continue to impact employment costs, professional costs and occupancy costs across our office network.

“The board will continue to take a rigorous and proactive approach to the management of costs.

“We expect further consolidation within the wealth and asset management sector, and continue to see many new acquisition opportunities coming to market.

“We will continue to assess and progress bolt-on opportunities as well as potentially more substantial opportunities in the longer term, with all potential transactions required to meet our strict investment criteria and due diligence procedures.

“The group’s trading outlook for the new financial year remains positive, with revenues slightly ahead of management expectations, notwithstanding the challenging macroeconomic conditions that we, our clients and the industry face.

“Inflationary pressures are therefore expected to impact on our margins in the short term.

“We remain confident in our ability to deliver double-digit revenue growth and long-term sustainable shareholder returns.”