Brooks Macdonald Group plc (BRK) Earnings Call Transcript & Summary

Good morning, and thank you to those of you who are joining us today for the Brooks Macdonald results, which came out yesterday for the half year. We'll be hearing this morning from the management team, who are going to talk you through the presentation. And then, of course, there will be the opportunity for Q&A at the end. So please feel free to submit those questions as we go along. And as a reminder, if you haven't seen it already, you can find forecasts on Brooks MacDonald on our website. But without further ado, I will hand over to Andrew Shepherd.

Many thanks, Hannah. Good morning, everybody. Thank you for taking the time to join us today. I'm joined by Robin Eggar, who is Managing Director of our U.K. Investment Management and Advice businesses. So if I can take you straight through to Slide 4, which is an overall summary of the 6-month period and pretty pleasing. I think that we've been able to report good results in what was a difficult period from respective of markets and market valuations with average market valuations down 10% over the period, difficult economic conditions, it would be fair to say, and extraordinary political conditions. And it feels a long time ago now that is in quasi we're coming up with the new growth strategy, but with right bang in the middle of this period that we're talking about here today. So really pleased that we've been able to maintain a stable financial base in terms of profits in line with expectations and an underlying profit margin of just up 25%, which is, as you can see from the right-hand side of this slide, is broadly where we've been for a couple of years now around 25% and up to 28%, which I think speaks to the underlying strength of the business. There is no debt on the balance sheet at Brooks Macdonald. And so we're well able to weather the market storms that come to us. Looking at the strategic progress of the business, the net flows, clearly, we'll dive into all of this a little later on. But net flows held up well at 4.4% annualized over the period and really driven hard by the Investment Solutions and Platform MPS Services, which are our B2B services where we're working directly with financial advisers, we'll talk about the pace of growth there. And over the period, we also transitioned on to the SS&C platform, a major milestone for any business, digital transformations are not easy and the migration went as well as we possibly could have hoped. So we're now into the next phase of embedding and realizing the financial benefits. But it's only one part of the overall digital transformation here at Brooks Macdonald. We'll talk a little bit more about that. We also completed 2 acquisitions over of the last quarter, actually of Integrity Wealth Solutions and Adroit Financial Planning, and we'll give you a little bit more detail about those in a moment. But we're delighted to have brought on 2 firms that we've known and worked hard with for many, many years now. And bringing them into the Group is a great reflection of what we're trying to achieve there. And basically, the confidence that we have in the strategy and our ability to deliver on that strategy and is reflected in the further increase in the dividend by another [ 2p ] at the half year, which now I think we're up to 17.5 years of dividend increases, which I hope speaks to the long-term sustainability of our strategy and the delivery of that strategy, which for those of you who were here -- who were on the call 6 months ago, you'll hopefully recognize that we -- what we talked about then and we've delivered on again over the last 6 months. So I'm going to take you through the highlights from a financial perspective. And as I say, when you have markets down by an average of 10% over the period, it creates a bit more of a difficult position for us from a revenue perspective, but pleasingly, revenue is only down by 5% over that period. We are geared to the markets, geared on the upside and the downside. So when markets fall, underlying profits will fall. Equally, as markets rose, underlying profits will rise, and we've seen a couple of decent months for returns in January and most of February. So underlying profit down by 18% over the period. Underlying profit margin at 25%, we're very comfortable with. Statutory profit 26% down in line with revenue. And underlying diluted earnings per share down by 15%, which obviously is significantly less than underlying statutory profit. And the reason behind that is an R&D tax credit which we received on the back of the investment we're making into the SS&C platform. And then clearly happy that the dividend is up by 8% over that period. Moving to Slide 7. It's important to be clear that because we've got a very stable business, a very strong business, we can ride out drops in markets and focus on what's going to actually benefit all of us in the longer term, which is really growing the business and dealing with more clients and more financial advisers. So that focus in growth came through in the investment that we made at the start of this financial year in our Cornelian Multi-Asset Funds and the pricing therein, which at the end of this period was around GBP 1.3 million worth of revenue. And when you get that combined with the market for, clearly, that's going to impact revenues and impacting them to the tune of 14%, as you can see there on fee income in this period. That's partly offset by non-fee income, which is predominantly interest income. That's an important part of the business model. Easy to forget about when you've been through a few years of virtually zero interest rates, but it's always been an important part of the model. And quite often, it's the case that the interest rates are rising as markets are falling, and therefore, protects the overall revenue position of the Group. So overall revenue down 5%; costs flat, mainly with regards to the calculation around variable pay and bonuses, which we will come back to in a minute. In terms of -- if you move to Slide 8. In terms of net flows and funds under management, you can see here that we've had a recovery from the lows up to 16.2 at the end of the calendar year '22, and clearly, markets have moved on somewhat, which is great. And in terms of organic flows, up 6.4% from half 1 FY '22. So like-for-like continuing to move on up. And as you can see, if you look half 1 FY '20, '21, '22, '23, that half 1 has gone from minus 7.7%, minus 5.4% for 4.4%. So all moving in the right direction. We'll talk more about our flows and our ambitions, which are very much to move towards 8% to 10% over the next few years with 5% to 6% the aim for this full year. And I think 4.4% is a good result given the conditions that we were working in the first half. If we move to Slide 9, looking at the yield on funds under management, you can see that we've gone from 69 to 70.3, which is mainly driven by higher interest rates, and that's been offset by a number of pieces, the reduction in the Cornelian funds at 1.3%. The pricing has broadly been pretty stable at [ 9.5 ], that's fairly stable. And then down 2.7, which is the effect of new business flows. And just to dig into that for a moment, what we've seen over a period of time now is a drive by the adviser industry towards MPS-type solutions, which as you know, is where our high growth is coming from, and Robin will touch on that in a moment. What we -- so what we're seeing here is that really drives growth. You get the change in the mix between the higher basis points from Bespoke Solutions and the lower basis points, but big drop-through in terms of profit from Managed Portfolio Solutions, those are the change in basis points there. We'd expect that to continue in the second half of this year. And then as distribution of BPS improves in FY '24, mainly because of the -- what we expect to the changing market conditions and more certainty for people, then that will start to equalize again. Moving to 10 and the cost point. So clearly, we're going to feel the effects of some inflationary pressures. When you look at the business like ours, the majority of costs comes from the people that we employ within the business. And it's a people business, it's important to keep them motivated and developing. So we have kept costs to a 6% increase over that time period, which I think reflects a fair pay deal for the people within the business. And indeed, the people within our business understand the market conditions that we're working within, and therefore, understand that the variable staff costs that be the bonus will be affected when we see market falls. Equally, as markets go up again, as they have been for this year, we expect to regain some of that territory. But it's a meritocratic business. We pay for the performance and the best people within the business will very much be looked after. So in terms of costs, staff up 6% in line. Non-staff is up 16%, which isn't in line, 6% is what we're looking for, but there are a number of exceptional items in here. So for example, in M&A, there are -- where we actually complete acquisitions, then the cost of those acquisitions go below line with this GBP 300,000 that you'll see below the line there. But where we don't go ahead, they come into our non-staff costs, but we don't expect them to be repeatable and they will be every now and again. But we did have a couple of acquisitions that we really looked into some depth and then decided not to proceed with, and I'm going to talk a little bit more about them and why we didn't a little bit later on in the presentation. But when you take those out and some legal fees, actually we end up around about the 6% that we guided to at the start of the year. On Slide 11, weak markets clearly impact everybody. And this is the segmentation between the U.K. and the international business. And that was a relatively tough 6 months for international and a good -- relatively good 6 months for the U.K. There is a little bit of cost allocation in there. So we have moved some costs into the international business as a result of fully loading the allocation over there. But the international business did have some unexpected outflows over that period. And obviously, the markets led to that business moving into a slight loss, albeit we do expect some of that to be -- some of the costs to be reimbursed to us in terms of the legal fees over the coming months. What I would say about the international business is I do believe there's a fantastic opportunity for us there. And it's a hugely fragmented market in basically Channel Islands and the Isle of Man. And we think there's a real opportunity for us to make progress, particularly with advisers that we've got lots of experience of in the U.K., but also directed with private clients in all 3 islands, which I intend to talk more about at the full year. At Slide 12, we've got a strong capital position. And we made 2 acquisitions in the last quarter, both of those from cash that we generated within the business, so retained earnings. And we've equally increased the dividend payout at the full year. We've increased it again now. So I think for us that's a great use of the cash that we are generating. It is a very cash-generative business. And if we can reinvest those in high-growth businesses joining the Group and continue to payout a higher dividend, then hopefully, you'll agree, that's a good use of cash. We are conservative with our funds, as you can see here. We have our regulatory capital. And then we had a significant buffer to make sure that we retain the strength that I've talked about earlier as a Group. And the surplus is there for additional acquisitions as we go through time. And then on Slide 13, net cash outflows. I won't go into any detail here, just to reiterate that it's a very cash-generative business and without any debt on the balance sheet. We don't have to fund or service any debt. So just a little bit on guidance before we move into strategy delivery. Firstly, we're anticipating profit for the full year to be in line with expectations. And we're also -- and indeed, as stated here, markets have moved on a bit. So we are expecting mark-to-market to move up. We're expecting net flows to be positive. We think 5% to 6% for this year, having done 4.5% in the first half. 6% overall is absolutely within our grasp. And we would reiterate the 6% for the full year in terms of cost increase is where we expect to be. So that is as far as I was going to go on the numbers. Obviously, I'll take any questions in due course. In terms of an update on strategy delivery, and for those of you that were on the call 6 months ago, I talked about this in some depth in half a dozen of slides. I wouldn't want you to get board listening to me again. And Robin has been on the front line actually experiencing this. So I'm going to pass it over to Robin.

Great. Thanks, Andrew, and good morning all. Good to have you on the call. As Andrew alluded to, he did spent some time at the full year, so I'm not going to go through the full set of the thoughts that underpins that we have, but I thought it's worth just picking out a few key points from that, which are really underpinning and driving both the organic and inorganic growth ambitions that we have as a business. The key first of these on this slide are the demographic and policy underpins that we have and then the changing habits within the advice and our trade market. Firstly, coming to demographics. Put very simply, people are living longer and the burden of providing for that eventuality is falling more and more on to the shareholders of the individual. As a result of that, people are saving more and the value of personal wealth is growing and is expected to continue, as seen on the top right chart on this slide. At the same time, the change in the pension market over the last 10 years have been really quite stark, as seen on the bottom left. The number of defined contribution schemes now firmly outnumbered number of defined benefit schemes. And indeed, those with no pension vision at all ends more than half over that same period. And in the business, we generally see that on a daily basis with both existing and new clients seeking to consolidate DC pots into one to the efficiency of that pot and recognizing the key part of that's likely to play sorry, in their future retirement plans. And of course, that focus on savings on self-provision falls firmly into the need for financial advice, and of course, our primary distribution channel being financial advisers, safely well played to pick up there. At the same time, the wealth management industry is highly fragmented, as seen on the bottom right here. I think that gives us a significant opportunity to capture more in terms of market share, whether that's through acquisition, as Andrew alluded to, or indeed through organic growth, both from financial advisers using us for investment work and indeed to our own financial and life business where we're able to capture that full value chain from the client. So some clear underpins in demographics there. And then moving on to the next slide, that requirement for self-provision and the associated requirement for advice is playing through into the stats as well. The number of ongoing clients with an IFA has increased steadily over the last 5 years. And at the same time, the number of regulated advisers has not kept pace with that increase in demand for their services. So what we're seeing as a result is a clear need for advisers to increase their efficiency and productivity and outsourcing those investment decisions to a third-party discretionary managers such as Brooks Macdonald is I think a really key part of achieving that. And certainly, when you look over the last 3 years from a market perspective, the rapid inflection points that we've seen over that period, as I'm sure you've all witnessed, really focus the minds of advisers who perhaps historically may have picked funds for their clients on an advisory basis not trying to solve that active versus passive debate today, but the need for an actively managed underlying portfolio and asset allocation I think has never been more clear, and hence, the need to outsource that and focus on the advice side from an IFA perspective is really playing into that outsourcing trend and the benefit that we've seen from that is likely to continue, as the stats on the bottom left suggest, yes, it is. IFAs will continue to outsource over the period. And again, we hope to gain market share over that period. The demand for different types of products, you see on the bottom right, for Bespoke Investment Solutions has remained relatively static over the period, expected to increase a little bit. But the dramatic increase in [ Model ] Portfolio Services and Funds, again, plays into the shift in demand and the requirement for advisers to increase their productivity. There is a clear need for advisers to ensure consistency and quality of outcomes for their clients, both from a regulatory perspective, but also from a business success perspective, and model solutions are a really key way of achieving that and one that we anticipate to continue to provide us with opportunities. So in terms of those opportunities on the next slide, they're really underpinning our ambitious growth strategy and our value drivers from an investment perspective. And again, some of you will have seen this slide before at our full year presentation. We talked about our mission, our purpose and our vision. Our vision is very much about working with intermediaries and being a leading investment manager for those intermediaries. But our purpose really cuts across all of it. And we're seeking to realize ambitions and secure features for all of our stakeholders. So importantly, that's first and foremost, our clients, but also our employees, our introducers, those advisers that we're working with and then clearly our shareholders as well. And on a daily basis, forgive me for saying, but my focus is perhaps on the first 3 of those. But clearly, if we are able to achieve it for those stakeholders, then absolutely, the value will come through for our shareholders as well. So it really underpinning what we do and that purpose across the board. I think also people and culture are a key part of our business. We still very much feel that we're a people business, and ultimately, this is still a people industry. And so the ability and the need to invest in our people, ensure that they can grow and have the opportunity to develop alongside our business is absolutely key. I think we've got a great mix of talent in Brooks Macdonald. There's really long-standing colleagues and also new clients we've seen through organic growth and indeed through the acquisitions that we've made, really give me the confidence that we can continue to deliver value and opportunity for all of our stakeholders. Andrew and I have been at Brooks Macdonald for well over 20 years now. And as I look back over that time, that real focus on people, culture on the end client, I think that's what's made us so successful and given us that ability to continue to be able to invest for future growth in our business, and that will be a key part as we go forward and as we continue to drive and deliver against that ambitious growth strategy. In terms of how we are delivering against that strategy, market-leading organic growth is clearly the key component to that. Andrew showed one slide on that earlier on. I think we've made excellent progress on that over the last half. Gross inflows are higher. Gross outflows are lower when compared to the same period this time a year ago. As a result, our net flows have picked up to about 4.4% on an annualized basis. And I think particularly given that market backdrop and the uncertainty over the second half of calendar year '22, I think that's even more impressive. At the same time, not surprising perhaps the gross inflows we can attach over the prior half. But also, we see seasonality, as we see on an annual basis, the first half tends to be weaker than the second half in terms of inflows. So we're really pleased with the efforts put in by colleagues across the business to support clients over that period in what was a difficult market period, particularly within our high-touch Bespoke service, where that's really impossible to have that client contact. And as a result, our outflows were GBP 50 million less in the U.K. in that Bespoke segment in the first half of FY '23 when compared with the same period last year. So again, we're pleased with that. New clients, perhaps in that segment has been a little more cautious of adding new moneys to the market and conversion times have increased a little bit, but the pipeline of new inquiries really remains really strong. And that overall level of inflows at 15% has been pretty consistent now, as you can see from the chart, going back over the last couple of years and outflow is stabilizing around 10%. We're pleased with the progression made there. The ambition, the focus absolutely is on increasing and improving both of those numbers -- sorry, not increasing both of those numbers, improving both of those numbers. We want to increase outflows and reduce outflows further in order to really reach those ambitions. And that will be the focus across our product range over the coming period. And we made a couple of quite key hires in that area as well in terms of global distribution and global marketing who will be supporting our efforts in that regard over the next 6 months. In terms of the components that we need to deliver on those ambitions, you'll see those on the left-hand side of this slide, they haven't changed frankly. We know exactly what they are. It's about delivering the right proposition, strong investment performance, a great client experience and a [ candy ] culture. We believe that helped the results and we'll continue to do so as we move forward. On Slide 20, I just wanted to touch in a bit more detail the sort of power behind that strong organic growth. And that really in the period has been that growth in our platform model portfolio service offering, both in our core platform offering and our Bespoke business investment solutions offering, which we touched on a little bit, and I think will be a key component going forward. As you can see here, despite the growth in funds under management, we've still seen accelerating growth in this area, up at 64% over the period. Can that go up forever, perhaps not. But equally, we don't believe perhaps this has peaked as yet and there's still opportunity for us to continue to capture and indeed to grow our market share from where we are today in that space. It's a very fast-growing part of the market. And importantly, for us, we've been able to do that without changing without compromising our existing centralized investment proposition, more been about proactively positioning ourselves for how the advisers we work with, how they choose to work and how we can best capture and work with them. It's clearly up to them, which platform to use. It's our job to make it as easy as possible to use us on those platforms. As you see, we're now on over 20 platforms across the industry and our models are all available on those platforms. Furthermore, we saw this trend for advisers who want to consolidate in terms of the platforms they're using. They're clearly using models more, as we saw on Slide 17. And that really gave further credence to our Investment Solutions offering, this idea of going out specifically and working with advisers to take the solutions for them. And that real knowledge and understanding of the adviser market, you'll know we work with advisers throughout our 30-plus year history now, and really by leveraging that knowledge, leveraging that existing investment solution. We backed that with a dedicated sales team focusing purely on investment solutions, and that's really enabled us to grow our market share quite substantially over that period. People ask what were the drivers in that marketplace? And clearly, performance and price are going to be absolutely key, but we think [indiscernible] the hygiene factors in that regard. The key is the attitude, the culture you bring, the understanding of the IFA marketplace and how we can help them grow their businesses and ultimately realize our ambitions as well. That's going to be the key going forward. Those investment solutions also have a supplementary benefit that they bring new clients to us, the breadth of [indiscernible] as well as the uptick we've seen in MPS moneys from those advisers, and we've never got over GBP 50 million of the state money from the same investment solutions advisers as well. So a real ability to across our product range to those advisers. So we believe that absolutely the Platform MPS will remain a powerful driver for growth going forward. And I'm just going to hand back to Andrew now to talk back through a couple more of those value drivers in a bit more detail.

Thank you very much, Robin. I remain genuinely excited about the opportunity ahead of us and the pace of growth of the Platform MPS part of the business. And our job is now to get all of the different sections of the business firing together and excited about the prospects there. So as Robin mentioned, I'd look at a couple more of the value drivers. First up, service and operational excellence. And key to our success is that we're able to bring a real ease of doing business to our clients and to their introducers as well. So in terms of progress in this regard, that's what this slide is about, we crucially went live on the SS&C platform in this time period, migration went as well as we could have hoped. So the teams, both SS&C and Brooks Macdonald did a cracking job to get us on to the platform. Now going through the embedding process and the realization of the benefits that I touched on before. So the SS&C replatforming is only one of a number of parts of our digital transformation. Certainly, we've moved our financial planning business on to the Intelliflo Financial Planning Platform during that time period. We've agreed with Salesforce that we're going to move our client relationship management on to their systems over the next year or so, starting with distribution in this year as part of the focus on distribution and our ability to serve our clients and the advisers to introduce them, which clearly is really important, in addition to which we are -- we've worked with our HR departments and finance departments to drive new technology. So it's their ability to act with efficiency and effectiveness is both improved. And as we move on to the next slide, that digital transformation is key from an organic growth perspective, but it's also really important from an inorganic growth perspective, which is our third value driver. As before, we're looking at acquisitions across advisers and investment managers and potentially transformational transactions as well. And we completed 2 adviser acquisitions during the time period. Both Integrity and Adroit happened to be long-term users of Intelliflo, which is helpful, reduces amount of system up [ people ], helps with the integration into Brooks Macdonald and they will also help us to maximize the benefits of this technology quickly. Both Integrity and Adroit really high-quality businesses that we've known for a long time. They add capability. They have skill sets to the business that we didn't have. They got strong profitability. And they've got great growth potential. They've both got enviable professional networks that they work with. And they've got the ability to widen those net considerably working with Brooks Macdonald. Most importantly, they've got cultures which are closely aligned to ours. And as I say, we've worked with them for a long time and we know that to be the case through the prior relationships that we've had with them. But as important as those acquisitions have been are the acquisitions that we haven't undertaken as well. And I'll pick out -- and we look at Lloyds, you can see, we look at 20 in that half year, some of which we then take forward and some of which we'll get quite deeply into, but they don't all work for us. And I think this is really important that we have a real discipline around the acquisitions that we're making. If they don't meet our criteria, if they don't bring us economic benefit, if they don't -- if there isn't a compelling strategic logic, they're not high quality, we're not going to do fixer offers. And if they don't have a culture that actually really is going to gel with Brooks Macdonald, then we're not going to undertake those businesses. I'm not going to ask them to join Brooks. It is a high bar, but it does protect us from making decisions which might give us short-term gains, but which causes problems in the longer term, and that's really important. We're not here for 1 or 2 years to get as much through the door as we can and then send it out. We're here to be, as we have been for the last 30 years, a sustainable business model that provides growth over a long period of time, albeit I'd like to think relatively quick growth. On which point, on the next slide, Slide 23, I'll reiterate that our medium-term ambition is to be a top 5 wealth manager in the U.K. and the Crown Dependencies. That's very much the intent. It does require us to move to a higher rate of organic growth. So as it says here, we want to move to 8% to 10%. And I do believe we've got the right ingredients in place to do that. I think we've got a great culture, working particularly with advisers and their clients. We've got a centralized investment process that delivered long-term quality investment returns to our clients. We understand totally and have the attitude that excellence is what's required. We believe we've got the right product set. And we are investing in our distribution. And we've always had strong distribution, but we've realized that actually we need some more skill sets, as Robin mentioned, [indiscernible] earlier, bringing them into the fault is really important for our future. We've got some work to do in the international business, and we recognize that, but we're working through that. We've made the Group a more global Group to make sure that international can take advantage of the benefits that have been part of the Group. And there's some real opportunities, as I said, around private clients in the Islands. Across the Group, the overall profile for growth looks very encouraging. Propositions is in great shape. And you can see it here being, this is Platform MPS, both running very hard, multi-asset funds and BPS. And we're working through the distribution of that, although to be fair, multi-asset funds across the industry had a pretty tough second half to 2022 and ours being relatively flat. I think it was a pretty good result. So we look forward to as momentum comes back into the sector to really moving that on. And BPS is hugely important to us. Everything that we do is about personal relationships, whether that's with an adviser on BMIS and Platform MPS and multi-asset funds or whether it's through Bespoke with the actual client. And indeed, our product client is all about personal relationships. So in terms of just concluding on Slide 24, the business has now been positive metros for nearly 2 years and we definitely anticipate that being 2 years. Shortly, we've got a really strong business model, which has allowed us to continue with robust underlying profit margin of nearly 25%. We will continue to make acquisitions, but we've made them selectively where they have real value to the business as with Integrity and Adroit. And all of that gives us the confidence that we can deliver on our strategy and on our ability to take that strategy forward and take advantage of the opportunity, which is labor for us. With which, I will pass back to Hannah.

We have a number of questions which have come through. Can you elaborate on the SS&C digital transformation? How much will it cost? And how will the benefits be delivered?

I certainly can elaborate. So our partnership with SS&C has been in place for 2 years now. We've got another 8 years to run on the contract, and I deliberately call it a partnership. And we are in this together. We are developing a set of systems that they can then rollout into the U.K. and Europe, which are based upon our requirements for our clients. So in terms of costs, you will undoubtedly have seen great cost across our industry in terms of transformation because this is a partnership, it's very much a sharing of any costs between us and SS&C. And so the number are significantly less. I haven't got to handle the number, which is in the accounts at the moment, but it's way below GBP 10 million for all the work that we've done with them. So it's -- in terms of the benefits, we're going through the embedding process at the moment. We've got some more development to do with them to get to where we want to be, which will allow us to realize those benefits, which we anticipate will come through full year '24.

You talked about net flow growth in your medium-term targets between 8% and 10% on the organic front. Can you give us an idea of what the splits will be? Will they mirror what we see now or do you see even more outsized contribution from MPS?

So if I can -- you won't put this back up, I know that. But when people have a look at it -- well, Slide 19 would be really good, if you can, Hannah. Your tech capabilities are way beyond mine. So when you look at Slide 19, this really I think spells it out for us. So you've got the inflows and the outflows. Now we made a shift to sort of 15% in H2 FY '21 and we stuck around that for the last 2 years. So the idea of bringing in additional distribution capability and new ideas and particularly expertise around multi-asset is that we can shift that 15% up through 16% and 17%. So we'd like to think we can get a couple of percent at that end. Equally, on the outflows, we made a shift down to 10% 1.5 years ago or so. And we were entirely expecting that we can continue that shift towards 8% on the outflow. So we're working both sides of the inflow and the outflows. And if we can get a couple of percent on each, then that takes us to 8.5%. And what we're seeing in terms of split is the great driver at the moment is MPS, absolutely. But what we want to see and what we expect to see is across MPS, whether that's through investment solutions or B2B or more direct with advisers through BPS, through multi-asset and through international. We expect all of those to be in positive flow. And that will reduce the differential between MPS and the other services. But I think for the next 2 or 3 years, I would expect MPS to be the biggest driver of growth.

And perhaps my segue from that. Could you explain why the MPS market is growing so much faster than the BPS market?

Yes, absolutely. So if you go back a decade ago, financial advisers use BPS to default. It was partly the fact that you get the warm all around the shoulder for each individual client that the investment manager provides. It was the portfolios with Bespoke to them, but it was more expensive. And the FCA put a particular search light or spotlight rather on costs for, I can't remember, 5 or 6 years ago now, which I think caused the advisers, and of course our advisers and us as a business, to reflect on what we're using the different services for. And the first point being that if you're in accumulation, for example, and you haven't got any particular requirements, then actually a service which could be the same as everybody else is using, as long as it fits your risk profile is going to be much cheaper, and therefore, the accumulation over a period of time with that low cost will be beneficial to the client. So I think the right things happened and there's a focus on that lower cost solution as you go through that accumulation phase. And then as you come out of the accumulation and go into decumulation or indeed if you have got special requirements yourself or attacks would be an example or vulnerability would be another good example, then actually, there's a reason to pay more. And that's when you start getting the Bespoke Solutions being utilized by clients and being recommended by advisers. So that's the reason for the shift and the reason why we've really worked our business model, so as we have a focus on MPS for accumulation phase and then BPS for special situations and decumulation.

Looking at acquisitions a little more closely, can you talk through your objectives and the upside to you? Is it a question of a straightforward fund acquisition? Is there costs in there? Is there new jurisdictions?

So [indiscernible] perspective. So let me put that out there. Internationally, we manufacture in the U.K. Crown Dependencies. So we sell into a limited number of jurisdictions, specifically South Africa, UAE, the European offshore financial centers like [indiscernible] and Switzerland. And we do actually sell some funds in Singapore, although not deliberately. We're not out there, we're just popular there, but I don't know why. But the -- in terms of the benefits that we're looking for from acquisitions, we are looking for strategic logic. So what are you adding to Brooks Macdonald, whether it's going to make us more successful. So Adroit, for example, is a quarter protection. It's an area where we run investment portfolios, but we haven't been giving advice. And so it's a particular area of interest to us. Integrity is very much about growth and management capability. And we needed to bring both into our planning business as we started to restructure that. And so when you look at investment managers on the other side, we're looking for -- clearly, we want to add assets to the platform because we've got a great operational leverage on the platform, but it's not just about that. It's about the -- what are their strengths that can add to the total in terms of what Brooks Macdonald can offer to the market. So we're not a consolidator. I think it's probably the important point. It's not just get it in at all costs. It's very much about buying the right businesses which add value to Brooks Macdonald across a breath.

Looking at international then, you said it has a big potential. What are your ambitions for this business? And what share of the overall business you might get to in, say, 5 years' time?

So I think we've got a real opportunity to be the pre-eminent wealth manager in the Channel Islands and the Isle of Man. It's an incredibly fragmented part of the marketplace. As I said, I'll talk about it more when we get to the full year and I'll talk more about distribution when we get there as well. But the -- what's evident to us is that there's no real lead up. And we think there's an opportunity for us to be the leader in those 3 islands. So that is our strategic goal, which is ambitious, but it's absolutely there for us to take. So whereas SKP in the U.K., arguably a GBP 150-odd billion, there is the market leader here. That's not the case how that stayed. I think we can fill that spot. And in terms of the share of business, I think they're 15% to 20% at the moment. We're pretty ambitious across the home business. So if they get north of 20%, they have done really well because the U.K. is going to run hard. So it's -- if I think a little bit of competition within the business, it's no bad thing. And I challenge them to get north of 20%.

Hopefully, what we do is best to make sure it stays [indiscernible]

Well, and that is it from questions from our audience today. So thank you both for your contributions, and we look forward to an update in 6 months' time.

Thank you very much, Hannah, and thanks everybody for joining us.

Thank you.