The maiden results for the first six months of trading on aim for Tatton Asset Management reveals what the firm calls a ‘transformational period’, with discretionary assets under management up 33 per cent over 12 months to GBP4.44 billion at 30 September 2017.
Paul Hogarth, CEO of Tatton explains that the major reason for listing the firm was to raise the profile of the business as they signed up wealth managers and financial advisers to support the discretionary management business.
“We are all energised and very excited about our listing and we are delighted with our maiden results,” Hogarth says. “Now when our sales consultants see new IFAs, they do not have to go into protracted due diligence because so much is in the public domain.”
Tatton won Best Investment Product Provider in the Wealth Adviser awards in 2017. Lothar Mentel, CIO of Tatton, explains that the firm’s growth has come from offering both active and passive portfolios, and the low costs of providing those through the platforms. The tracker portfolios start at 16 bps while active portfolios are at between 55 and 80 bps, depending on the risk profile, with hybrid portfolios sitting somewhere in the middle.
“IFAs are looking for low cost in investment,” he says, “and our 15bps charge is still lower than the cost of investment that IFAs have experienced when they managed portfolios themselves. It’s a no-brainer that they can introduce our service without the client suffering higher costs and they get a more consistent investment outcome.”
Hogarth says that, moving forward, the firm plans to increase the number of firms that are using the discretionary portfolios.
“We are also planning strategic partnerships with distribution businesses and platforms and a bit of M&A, with no specific target today but there are a number of different options and opportunities.”
The firm is looking at potentially buying another distribution business, or a compliance consultancy or a sub scale discretionary fund manager.
“The demand for wealth managers and IFAs is incredibly strong – it has never been busier and many IFAs can’t cope with the number of clients they have already.”
Asked about robo-advice, Hogarth says: “We use robo digital engagement to enhance our service proposition,” while Mentel (who was previously CIO of Octopus), added: “Our ability to offer our service at 15 bps is very much down to technology, so we look closely at what technology can offer us. If there are pieces in the robo offering that can help we will embrace them, but Nutmeg started at the same time as us and a comparison shows worlds in between us.”
Other figures from today’s results show the average run rate is over GBP80 million per month, while Group Revenue has increased 31 per cent to GBP7.3 million (1H16: GBP5.6 million).
All three divisions of the Group have delivered growth in revenues (Tatton Capital Ltd revenue has increased by over 48 per cent year on year, while Paradigm Partners Ltd and Paradigm Mortgage Services are up 23 per cent and 15 per cent respectively). Adjusted EBIT is up 56 per cent to GNP3.1 million (1H16: GBP2.0 million) with an adjusted EBIT margin of 42.2 per cent (1H16: 35.4 per cent) and net cash of GBP10.52 million.
The firm also reports a zero rate of client attrition.