Investec smiles at UK wealth managers, growth drivers remain strong

The bank outlined its views on a group of UK-based wealth management firms, saying they are benefiting from various strengths, despite the current volatile macro environment.

Investec Bank in the UK offered a series of buy recommendations on a suite of wealth management companies, smiling at AJ Bell, IntegraFin Holdings, Quilter and Rathbone Brothers, while preferring to hold Brewin Dolphin and Hargreaves Lansdown.

The bank released a research note on its view of the sector, saying the general conditions for these wealth managers remain broadly positive despite ongoing concerns over supply chain disruptions and the impact of Russia’s military actions. against Ukraine.

“This market momentum should support attractive levels of long-term growth, increasing cash yields and further strengthening of balance sheets. While we see good value across the sector, our preferred names are those that are the more likely to widen the council gap and the rise of the affluent masses,” the company said in the note released late last week.

“In our view, one of the main attractions of the sub-sector is its exposure and adaptation to strong underlying structural growth drivers. Our own analysis is consistent with that of industry commentators who predict that assets under administration in the UK wealth management industry will grow at a compound annual growth rate of 7% through to 2024, with the potential for this to continue. long term, in our view,” it continued.

Investec said its “top choice” is Quilter, reflecting the “integrated nature of its model” and its ability to connect with driving market themes; he also sees “strong structural support” in AJ Bell’s business model.

Specifically on Quilter, Investec said: “The integrated nature of Quilter’s model not only makes it unique in the market, but also positions it to take advantage of a number of trends that we expect to play out. The scale of its financial planning footprint should position it well to benefit from the growing demand for advice, and the quality of its investment solutions should also enable it to capture a greater proportion of the investment pool. fees available. Beyond this, we believe that the group’s evolving hybrid model, along with its diverse source of customer origins, perfectly positions the group to capitalize on continued growth among the affluent masses.

Elsewhere, the bank said the quality of IntegraFin’s bid “does not appear to be fully discounted in the share price”, it also believes the share price cut on Rathbones “feels overdone “. (IntegraFin is the holding company of Transact, the UK investment platform.)

“We rate Brewins and Hargreaves at HOLD given the risks of deploying new technology and the relative earnings profile,” Investec said.

Dolores W. Simon