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Brewin Dolphin shares dive 5.7% after it warns of market instability next year

Shares in Brewin Dolphin declined by 5.7 per cent today after it said it expects more unstable market conditions next year.

The wealth management firm said that after markets rebounded strongly in the last 12 months, they will face more volatility as a consequence of the winding down of public stimulus measures and consumer spending returning to normal.

But the firm thinks it will perform well in the months ahead, due to rising demand for financial advice that has been spurred by the pandemic and the transfer of wealth between generations.

Money: Brewin Dolphin saw income growth driven by a significant surge in fees from private clients, rising demand for financial advisory services 1762 and wealth core

Brewin Dolphin revealed it had attracted record discretionary fund inflows of £4billion in the year to 30 September, with income of more than £400million.

Income growth was driven by a significant surge in fees from private clients, expanding demand for financial advisory services 1762 and wealth core, and the £1billion increase in discretionary net flows.

Brewin Dolphin also noted the strong performance by its Irish division, which saw total fund growth of £800million and a 30 per cent jump in income on the back of Brexit-related transfers and a one-off corporate transaction in the third quarter.

The company’s chief executive Robin Beer said: ‘We have had an exceptional year achieving record discretionary inflows and are delivering on our growth ambitions.

‘None of this would have been possible without our people, who have adapted so effectively to remote working and continue to focus on putting our clients at the centre of all their decision making.

‘We have remained relevant by continuing to innovate our propositions whilst also developing our digital capabilities. We have started to drive operational efficiencies through our client management system, and our new custody and settlement system is now live.’

Future: Brewin Dolphin (headquarters pictured) believes it will carry on performing well due to the expanding demand for financial advice and the transfer of wealth between generations

Partly because of running two parallel client management systems, the group forecasts operating costs this financial year will rise by a mid to high single-digit percentage figure, with wage inflation and other investments also contributing.  

British investment firms have benefited heavily from gaining hundreds of thousands of new customers during the pandemic, many of whom were young and trying investing for the first time.

AJ Bell’s results for the 2021 fiscal year showed it attracted 87,000 more customers to its platform, while Hargreaves Lansdown added another 233,000 clients.  

Both firms noted that trading activity has slowed down as restrictions have loosened, but are confident they will continue to do well out of long-term changes affecting the investment sector.

Commenting on Brewin Dolphin’s trading update today, Rob Murphy, the managing director of financials at Edison Group, said: ‘After a bumper year helped by stimulus vaccinations lifting investor sentiment, market volatility could be ahead as Covid-19 support measures unwind and consumer demand falls back into normal levels. 

‘Given the pressure on costs in the short term, investors will be watching closely to see whether it stays on track to deliver on its vision to deliver double-digit earnings per share growth by 2025.’ 

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