The first quarter of 2024 has revealed a stark divergence in fortunes for two prominent UK wealth managers. Rathbones, one of the country's largest investment and wealth management firms, has reported continued significant client withdrawals. In contrast, its smaller rival Brooks Macdonald has signalled a positive shift, recording its first quarterly net inflow in several years.
Rathbones Grapples with Sustained Outflows
Rathbones disclosed that it experienced net outflows of £1.2 billion during the first three months of the year. This continues a challenging trend for the firm, which has now seen clients withdraw funds for three consecutive quarters. The outflows were primarily concentrated within its Investment Management segment.
Despite the negative flow of client money, the firm's overall funds under management and administration (FUMA) saw an increase. This growth was driven by positive market movements, with total FUMA rising to £105.3 billion as of 31 March 2024, up from £104.7 billion at the end of 2023. The company pointed to ongoing market volatility and geopolitical uncertainty as factors influencing client sentiment and decision-making.
Brooks Macdonald Breaks the Cycle with Net Inflows
In a notable turnaround, Brooks Macdonald announced a return to net positive inflows for the first time since 2021. The group reported net new business of £100 million for the quarter ending 31 March 2024. This marks a significant reversal from the £500 million in net outflows it reported over the previous six-month period.
Chief Executive Andrew Shepherd described the quarter as one of "resilient'' performance. He attributed the improved flows to the firm's strategic focus on intermediary relationships and its diversified service offering. Brooks Macdonald's total funds under management also grew to £17.9 billion, boosted by both the new client money and favourable market conditions.
Market Context and Strategic Moves
The contrasting results highlight the competitive and sensitive nature of the UK wealth management sector. Rathbones is currently navigating the complex integration of its recent merger with Investec Wealth & Investment (UK), a deal that created a formidable player with over £100 billion in assets. The integration process itself can sometimes unsettle existing clients, potentially contributing to short-term outflow pressures.
Brooks Macdonald, operating on a smaller scale, appears to have successfully stabilised its business after a period of contraction. Its return to growth suggests a regained confidence among its client base and the financial advisers who channel funds to the group.
The performance of both firms will be closely watched in the coming quarters as indicators of broader health within the discretionary wealth management market. Key factors influencing the sector include the direction of interest rates, equity market performance, and the ongoing demand for robust financial planning services.
