Brooks Macdonald (BRK), although well known in the industry, is still a wealth manager that lives in the shadows. It may lack the opulent size of St James’s Place, or the brand recognition of, say, Charles Stanley. Nevertheless, Brooks is starting to benefit from the actions that its management has taken to reorganise the business over the past three years. The net result is that the growth prospects for Brooks now in place demand a higher rating for the shares than its obvious competitors; and that rating may rise as investors increasingly recognise the improvement in the company’s operational performance that should drive its earnings growth.
- Leaner and better organised than in the past
- Acquisitions to drive long-term growth
- Inflation should ensure fund inflows
- Rating attractive for the sector
- Exposed to the financial market risks
Wealth management in the UK is enjoying something of a renaissance, with most companies picking the low-hanging fruit of higher market activity and commensurately higher fees. True, this might be a temporary phenomenon – it is doubtful that many of us will continue to save 16 per cent of our earnings as was the case in 2020. Even so, the unprecedented flow of investors' funds into wealth management's coffers and, by extension, into those of asset managers is as much a response to the unprecedentedly low interest rates that savers have endured since the 2008 financial crash as to any outstanding merit on the part of the managers.