The head of Brewin Dolphin said the regulatory shake-up that is due to affect the sale of investment products will create opportunities for the business in Scotland after the company unveiled a big increase in profits.
Brewin Dolphin increased pre-tax profits 36%, to £29.9 million in the 52 weeks to September 30 from £21.9m in the same period last year, helped by cost reductions and a small rise in income.
Jamie Matheson, executive chairman, said Brewin Dolphin is well positioned for growth ahead of the reforms included in the Retail Distribution Review (RDR). He believes the reforms, which take effect from December 31, will allow investment specialists of Brewin Dolphin's scale to grow at the expense of small players.
Loading article content
The RDR requires advisers to hold a qualification. Businesses will make money by charging fees for services provided rather than by earning commission on the sale of products.
Mr Matheson said: "Firms of our peer group have the size to deal with the training requirements and the facilities and ability to offer services for those to whom RDR has a more restrictive impact."
Noting the company is already providing services for some smaller firms, Mr Matheson predicted the review could prompt some independent financial advisers to give up.
Mr Matheson said: "There are indications that for some of the smaller IFAs this is just too hard, especially people that are late in their career who are not keen to do the training they need to qualify."
He predicted the ranks of advisers would be thinned on both sides of the border.
Mr Matheson said there is scope for the company to achieve organic growth in Scotland, where wealth managers have been jockeying for position.
With five offices in Scotland, Brewin Dolphin employs 121 FSA registered investment staff in Scotland out of a group total of 599.
He also indicated Brewin Dolphin may seek to accelerate growth by recruiting teams and individuals from rivals.
Brewin Dolphin will assess acquisition opportunities as they arise.
"I don't think we will have more branches but we would be pretty keen to bring on new clients," said Mr Matheson.
He added: "Activity in bringing in new teams is a bit slower but we would not want to miss opportunities. If people want to come and join us we always want to talk to them."
The increase in Brewin Dolphin's profits was partly driven by a sharp fall in the amount it paid to a financial services sector compensation mechanism, to £553,000 from more than £6m last time.
Redundancy costs fell to £577,000 from £1,008,000.
Funds under management increased by 8% annually, to £25.9bn from £24bn.
Higher margin discretionary funds under management increased by 16.7% annually to £18.2bn.
The FTSE 100 index rose by 12% over the year.
Total income increased by 2.1% to £269.5m from £264m. Signalling confidence, the board is proposing a final dividend of 3.6p per share taking the full year total to 7.15p per share, up from 7.1p.
"Many of the problems that caused concern in the financial services industry during the past year remain unresolved," noted Mr Matheson. He added: "However, equity markets have remained remarkably resilient and there is some sign of improved trading volumes since the summer."