Rathbones: Fee income dips amid market turmoil
Turmoil in the market following the introduction of Trump’s tariffs dented the performance of Rathbones Group’s funds, leading income from its wealth management fees to drop three per cent in the first quarter of 2025.
Assets under management at the group dipped by five per cent by the end of March due to a combination of low investor interest and extreme market volatility, it revealed in a quarterly trading update.
Even as investors continued withdrawing cash at significant rates, new money coming into the business fell sharply, leading Rathbones to lose £784m over the quarter in outflows, disproportionately from its asset management arm.
However, its wealth management arm suffered the brunt of the losses from investment performance, losing £4.4bn on the market compared to only £137m from its asset management business.
This was most severe in Rathbones’ bespoke portfolios, which accounted for less than half of the group’s assets but almost three quarters of market losses.
Net operating income dipped by 1.6 per cent across the entire group, thanks to increasing fees from advisory services and its asset management arm.
As a result, City broker Peel Hunt slashed the wealth manager’s earnings forecasts by six per cent, downgrading the group’s stock price target from 2,225p to 2,100p.
Rathbones noted that most of the firm’s wealth management fees were billed on 4 April, two days after ‘Liberation Day’, when markets were down almost five per cent since the start of the month.
According to RBC estimates, Rathbones (along with AJ Bell) has the lowest proportion of its revenue linked to asset based fees throughout the sector, leaving the group’s profit less vulnerable to performance dips.
This has caused the group’s share price to decline only 1.5 per cent since the start of 2025, compared to other financial firms that have seen double digit drops.
“We see this year as the inflection point for Rathbones,” said Peel Hunt analyst Stuart Duncan.
“The bulk of the heavy lifting of the integration process will be largely complete, delivering the £60m of cost synergies (which we believe could be conservative).”
In 2023, Investec announced that its wealth and management division would combine with Rathbones in a £839m tie-up. Rathbones said today the migration of clients was now over 90 per cent complete.
“Market conditions have been challenging, but Rathbones should return to growth as conditions improve. Ultimately, wealth management continues to offer long-term strategic growth opportunities,” added Duncan.
In March, Rathbones chief Paul Stockton announced he would be retiring from his role after six years in the job, replaced by former Man Group president Jonathan Sorrell.