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Charles Stanley Direct fee hike helps manage sliding AUM

Charles Stanley Direct fee hike helps manage sliding AUM

Client assets at Charles Stanley tumbled 8.8% over the last three months of 2018 as risk assets slumped, falling from £25 billion at the end of September to £22.8 billion at year end.

That compared with a 7.9% falling in the MSCI WMA Private index and a 10.4% loss on the FTSE 100. Assets in ‘every service type were negatively impacted by the challenging market conditions’, it said.

By late morning shares in the business were down 6.7% to a November 2016 low of 250p. Broker Peel Hunt reiterated its hold following the update as it cut its target price from 340p to 280p, taking the median analyst valuation to 307p.    

The size of the fall also came despite the cushion of ongoing inflows, with clients in the premium discretionary service adding around £200 million in funds over the period, a 6.1% rate of growth.

Following an increase on fees charged on its Charles Stanley Direct fund broker platform, assets were flat over the three months.

That increase helped to deliver a 27.3% increase in income from the division, which alongside a 26.7% increase in planning revenues helped grow total fee income 1.9%.

Charles Stanley chief executive Paul Abberley (pictured) said: ‘Despite difficult market conditions in Q3, which have had a significant negative impact on headline funds under management and administration, I am pleased to report that we continued to win new discretionary mandates and that financial planning and Charles Stanley Direct delivered strong increases in revenues.

‘We will continue to invest in scaling these divisions as part of our holistic wealth management proposition.’

Total revenue across the group year-to-date rose 3.4%, from £113 million to £115 million.

Charles Stanley reported pre-tax profit from its core business of £5.7 million over the six months to the end of September, up from £5.4 million year-on-year.

Revenue rose 5% to £77.7 million as funds under management and administration also increased by 5% to £25 billion, while costs fell slightly from £73 million to £72.4 million. Discretionary funds were up from £12.1 billion to £13.2 billion.

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