The chief executive of Close Brothers' asset management division talked to this publication about clients' behaviour in current market conditions, the direction of the business, and recent half-year results.
New clients of Close Brothers Asset Management are waiting for the most opportune moment to deploy cash into the market. Existing investors aren’t bailing out of the market amidst current sharp gyrations, its chief executive Martin Andrew told this news service yesterday.
Andrew said that he and his colleagues are reassuring investors on how to navigate market storms, speaking on the day that the asset management business delivered a 17 per cent year-on-year rise in adjusted operating profit for the six months to 31 January 2020, reaching £12.6 million ($16.3 million). That result contrasts with parent firm Close Brothers’ reporting a 9 per cent drop in group operating profit, adjusted, of £125.7 million. The group declared a rise in its interim dividend of 22.7 pence per share, a 3 per cent rise.
Within the asset management segment, managed assets rose by 8 per cent to £12.7 billion from where they were at the end of July 2019; total client assets rose by 5 per cent to £14 billion.
Market gyrations shine a bright light on why strong communications with clients, and advice on wealth management, is good value for money, Andrew said.
“This is the sort of environment that clients pay us a fee for.”
Asked how clients have reacted to the market moves, Andrew said: “There has been a much-increased conversation with relationship managers, portfolio managers and others. Some of them will be more anxious than others…in the main we are trying to reassure them. What we say and know is that we have been here before and will be here again,” Andrew said.
Andrew said he hadn’t seen outflows of client money. What is the case is that new clients are sitting on the sidelines waiting to put cash to work in the market, and they are perhaps taking longer because of current market conditions.
“Nobody knows how it is going to unfold…it is hard to imagine that any sector will not be impacted if it [COVID-19] grows very rapidly,” he said.
CBAM has been busy investing in technology, and will continue to do so. For example, he said that the firm has installed a new CRM system so that different types of clients can move around to different parts of the offering without having to go through delays and irritating changes.
The size of the client numbers and AuM, as well as other metrics, show that CBAM’s profile in the industry is rising and is a positive one, he said. The business is a vertically integrated one, bringing wealth planning and investment management into the same offering.