Rathbones, the British wealth manager, has reported a 1.7% decline in its assets under management (AUM) during the third quarter, as client outflows weighed on its wealth business. The firm attributed the drop to a combination of market volatility and client withdrawals, particularly in its discretionary investment management division.
Quarterly Performance Overview
Total AUM fell to £57.8 billion at the end of September, down from £58.8 billion three months earlier. The decline reflects net outflows of £200 million, alongside negative market movements that reduced assets by £600 million. Despite the downturn, Rathbones highlighted that its investment performance remained resilient, with client portfolios outperforming benchmarks in several key mandates.
Wealth Management Division
The wealth management segment saw net outflows of £100 million, driven by client withdrawals and lower new business inflows. However, the firm noted that client retention rates remained high, and the pipeline for new business was encouraging. The division's revenue fell by 2% compared to the previous quarter, impacted by lower fee income due to the reduced asset base.
Investment Management Performance
Rathbones' investment management arm also experienced outflows, with net withdrawals of £100 million. The firm's multi-asset funds faced particular pressure, as clients reallocated capital to cash or lower-risk products amid market uncertainty. Despite this, Rathbones' long-term investment performance remained strong, with 70% of its funds outperforming their peers over a five-year period.
Market Conditions and Outlook
The wealth manager cited ongoing macroeconomic headwinds, including rising interest rates and geopolitical tensions, as factors contributing to investor caution. Rathbones expects market conditions to remain challenging in the near term, but remains optimistic about its growth prospects. The firm continues to invest in its digital platform and client service capabilities to enhance its competitive position.
Rathbones' CEO, Paul Stockton, commented: "Our third-quarter performance reflects the difficult market environment, but we are encouraged by the resilience of our investment performance and the strength of our client relationships. We are well-positioned to navigate the current headwinds and capture opportunities as markets stabilise."
Financial Impact and Strategic Initiatives
The decline in AUM is expected to impact Rathbones' fourth-quarter revenue, as fee income is linked to asset levels. However, the firm is taking steps to mitigate the impact, including cost control measures and a focus on higher-margin services. Rathbones also announced the completion of its acquisition of Investec's wealth and investment business, which is expected to generate cost synergies and enhance its market presence.
Looking ahead, Rathbones plans to expand its advisory services and target high-net-worth clients in the UK and international markets. The firm believes that its strong brand and investment expertise will help it attract new clients and grow its AUM over the long term.
