Brewin Dolphin lacks a catalyst

As the recently-appointed chief executive of Brewin Dolphin (BRW), Robin Beer faces two important balancing acts.

The first concerns the impairment of one intangible asset common to all discretionary wealth managers: that face-to-face touch. Though overall client satisfaction reportedly rose in the 12 months to September, Mr Beer and his colleagues are conscious that despite big platform and technology upgrades, many clients’ trust can only ever be won in person.

Buoyed by the medium-term promise of a return to normality, the chief executive expects new client relationships to start with “a meeting in person, then an augmented digital process”. He also believes this year’s surge in financial engagement will remain long after Covid-19 is defeated.

The second priority involves making investments in technology while keeping a lid on group-wide cost inflation. Last year, fixed staff costs rose at a faster pace than revenues or operating profits, climbing 9.9 per cent to £139m. This year, against a backdrop of growing focus on sector overheads, Brewin says operating costs will only rise by mid-single-digits.

Then there are the “challenging…economic and social headwinds” that are beyond management control, which seemed to lead the bearish market reception to numbers that nonetheless beat earnings and dividend per share forecasts.

Consensus earnings forecast for the current period point to growth, however slight. At 20.9p per share, they have also climbed 22 per cent in the past six months. Ongoing resilience, a sensible strategy, and a decent dividend yield notwithstanding, the stock lacks an obvious re-rating catalyst. Hold.