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

We are here now and ready to get started. We are joined today by Andrew Shepherd, CEO and new CFO, Andrea Montague, who will focus through the results which were released yesterday. We will take a canter through the presentation and then there will an opportunity at the end for Q&A. Please feel free to submit questions as we go through, and we shall ask them at the end. Otherwise, without further ado, over to you, Andrew.

Thanks very much, Hannah. Good morning, everybody. Thank you very much for joining us today to as Hannah says counted through the presentation and then we've had lots of interesting questions in the past. Hopefully, we'll get lots of interesting questions today. So if we can, we'll go straight to Slide 4. That's all right. Thanks, Hannah. Excellent work there, you make a wonderful PA, Hannah. So for the year as a whole, I think it would be fair to say we're pleased with the results. We've managed to produce solid performance with the underlying profit margin sitting at 24.5%. It's been a challenging year for a number of reasons. And it's easy to forget quickly how much happens in an any one given year. We've had the war in Ukraine throughout the whole of this year, which has disrupted all sorts of markets. We've seen interest rates rising faster than certainly at any point in my career. So in addition to which you can add and I nearly forgotten about it there as well, Trussonomics which is now a year ago incredibly, but which caused major disruption in the various markets including in equity and clearly in both markets. So it was a challenging year. So to produce 24.5% profit margin, which in our sector is pretty good, is pleasing, and Andrea will dive into more of the financial figures in a moment. Flows were positive at 5.2% net for the year, that's up from 4.8% in the year before, which again is pleasing. We'll come on -- we'll give you some more detail around gross inflows and gross outflows because there's a really interesting story around where the money is coming from and where it's going out as well. But suffice to say, there's one takeaway and it would be that our gross inflows were a new record for us, the highest gross inflows we've seen into Brooks Macdonald in the 32 years that we've been going, which is great years. From a tech perspective, we completed the transition on to SS&C. So that platform being front, middle and back systems or processes. So a big, big piece of work. That was in July of last year, so we've been live for 14 months now. But we have also been increasing the investment intake across the board with new technology for our Financial Planning division. And we're now in the process of bringing on Salesforce, which is a CRM into the whole business and replacing a half a dozen different CRMs, which we did have before so very much a part of our becoming more efficient and effective, which we'll talk to more as we go through. Two really great acquisitions completed. I'll talk more about M&A later, but both Integrity and Adroit have integrated into the business very quickly. We knew they worked, we've known them for 10 years, both companies. So we knew that culturally they're going to be well aligned. And talking of culture, consumer duty is very culture driven. Again, I'll talk to it a little bit later. But we were well positioned for it. It was a lot of work to get it to complete, one needed to be completed around value assessments, et cetera, but I think we are very well aligned with the regulator in that regard. And in terms of the future, which is what any dividend increases about, clearly, the Board are confident that we can continue the great growth record we've had over many years, and we increased the dividend by 5.6%. And up to 75p, which hopefully is pleasing for all of you who are shareholders already. With which, let me pass to Andrea who will take you through the figures.

Thank you, Andrew, and good morning, everyone. So Andrea Montague, I'm 6 weeks into the role, and my priority really has been to get to the business, to get to know our people and importantly, deliver the year-end. So with that, if we can turn to Slide 6, Andrew has already mentioned a number of weeks, so won't dwell too much on this. But I think worth pointing out revenue up, and we delivered a set of results, a robust set of results yesterday in line with market expectations, and that is against what was a very challenging macroeconomic conditions with average markets down by 6%. And pleasingly, though, as well, I look at net assets, which is an indication of the strength of the underlying business and also cash, which is strong. We -- I go on to it, but we managed through the year and had 2 acquisitions through the year with still a strong cash balance and also a strong balance sheet to support the business going forward with an underlying profit margin of 24.5%. So then let's get into the numbers in a little bit more detail, but I'll keep it quite high level, and we can cover any questions on it later. So if we turn to Slide 7, please, Hannah. I've highlighted just the key financials we've covered most of these. And in fact, at our Q4 update disclosed the flows. Again, there, we saw strong flows into platform, in particular, with GBP 1.3 billion into MPS. That represents an organic growth rate of 65.6% which again really strong inflows in particular, that we've seen throughout the year and continue to be in this quarter as well. Andrew will touch more on gross flows and net flows later in the pack. So I'll turn now Hannah to Revenue, please? So we -- sorry, we touched on these. I think this is actually better covered in the pack when we get to gross flows. But those are the numbers that we talk to 5.2% up on the right-hand side there of inflows behind that very, very strong gross inflows. These are the net numbers. And I think that's very important for us as we face into Q1, where we are seeing headwinds in flows, but Andrew will cover that. So Page 9, revenue, just briefly then filling out a few key facts from this overall. The group's yield has gone up from -- you'll see on the left-hand side by 1.2 bps. So I've done a bridge to try and keep this -- well, I like things simple to try and keep it clear. So in terms of book mix we've talked about for some time, the move from EPS to MPS has had an impact on our [ BPS ], but also the impact of the relaunch of the Carnelian fund there, 1.3 bps dying. We've obviously seen increased non-fee income, which is a combination of interest income and transactional income going up, and that is a natural foil in difficult markets to total fee income. And we'll cover a little bit later than the mix and as well as the yields as well. So I think what I would also feel like in this importantly is that we made 2 acquisitions in the year, which are also supporting the underlying profitability of the group. So yes, strong momentum in the business, but it's against a background of strong macro or challenging macroeconomic conditions. So turning now then to cost, the other side of that. So increased costs from GBP 87.7 million to GBP 93.5 million. What I've said out here is a bridge across. And as you know, [indiscernible] a couple of points from this. And importantly, the acquisitions we acquired Integrity and Adroit, and they've added GBP 2 million to the cost base. The important point is they've already added GBP 0.5 million to profit, and that's just in 1 year. So really strong acquisitions from what I've seen of them so far and importantly, the teams are settling in well to Brooks, and we've got forecast in line with what I would expect in terms of increasing revenue coming from those and profits. And the other thing I would point, I think, importantly, on this, which no doubt we can get into Q&A, is GBP 3.2 million on SS&C. So Andrew, in the past, as outlined our transition and migration to SS&C., that is now complete. Pleased to say it's really there to support our business going forward. And from a finance perspective, I see this as a huge positive for the group. We have got a very competitive rate card with SS&C, and that protects us from inflation and it also means that as we grow volume through this business, cost base will fall. So it's a leveraged impact on our cost base, and it will support improved efficiency in the future. So turning now to balance sheet. I've already mentioned the strong balance sheet, and we remain well capitalized with GBP 15.2 million surplus. I think it's important to step back to say that we have no debt on the balance sheet. We've managed to pay dividends, invest for organic growth, inorganic growth, continue to run the business and still have a surplus, which in the current market conditions, I think, is the right place to be. And then finally, on cash is the next slide, Slide 11, Hannah. And I've touched on this already. So you can see that on the left of that slide, strong operating cash flows, strong cash generation from the business, and we've used it importantly to pay dividends, which I recognize support to our shareholders. And the other large proportion there is on the purchase of the 2, Adroit and Integrity that I referred to. So I think another demonstration of our strategy to grow the business and be able to invest and support growing dividend, which I know is important. So that was a very quick canter through. I'm very happy to take questions, and I'll hand back to Andrew.

Great. Thank you very much, Andrea. Okay. What I want to get into here first is the opportunity, the structural fundamental opportunity that exist for Brooks Macdonald, but also for the U.K. industry. Those of you that were with us 6 months ago and a year ago, we've heard me banging on about this before, but I do think it's really important. So in terms of wealth in the U.K. the demographics dictate that we need to have bigger pots of money to provide for lengthened retirement periods. And you can see that the predictions are that this moves gradually from GBP 4,000 billion, GBP 4 trillion, up towards GBP 5 trillion and GBP 3.5 trillon over the next 3 years or so. As well as that demographic piece, you've got a policy shift that we've seen over a period of time now and which is effectively that the onus is upon us to look after ourselves as we go into retirement. The good old days of your DB scheme looking after you as you wander through a pleasant retirement. Hopefully, they'll still be pleasant retirements, but now it's defined contribution schemes and you're very much responsible for your own pot. Now with the "simplification" of our pension system over many years realistically means that everybody in defined contribution needs to be taking advices at some point and on that route towards retirement. Pension freedoms alone means that anybody can take all of the money out of their pocket in one go, which normally would be a terrible idea. So people need to take advice and people are recognizing this. So you can see the number of ongoing clients with IFAs that's moved from just over 2 million in 2016 to 3-point-something in 2022. So the message is getting out there. People are worried. People are concerned. People are needing to take advice, which is fantastic. But let's also recognize that 3-point something million is only around about 10th. And let's assume that, that's husband and wife. It's still only about 20% of the working population. And I actually got some new stats through this morning, which I'll share with you, which are that -- this is from HSBC, that just 9% of adults received financial advice, 28% of adults who have more than GBP 50,000 of assets have an adviser. So 72% of the population that has more than GBP 50,000 of assets do not, at this point in time, take advice. And I think that, that's going to have to turn around as we go through the coming years and as people come towards retirement. It's also that the assets in the advice gap, so there's people that aren't taking advice average at GBP 119,000, it's down a bit from last year because of markets, but it's still over GBP 100,000. So every single one of their is a good client. So I think just in terms of the opportunity for the U.K. wealth management industry and the advice industry, I think the opportunity is huge. For us, who are working in 2 spheres, so within -- as a financial adviser in our own right, but also providing investment solutions to advisers. The bottom left chart is hugely important as well. So IFAs are expecting to continue outsourcing more over the next couple of years. So this was on our survey last year, this year and next year, that's referring to, and that includes MPS, and we'll go on to talk about MPS in a minute, but that's where the majority of our growth is coming at the moment. But it's also in funds and fund of Funds in particular, so multi-asset funds where we have 2 ranges and in Bespoke. So whilst Bespoke Solutions have come under a bit of challenge recently. The expectation is still for advisers to outsource that. And to me, that's entirely logical because when it gets Bespoke, it gets complex, and to be able to run those sorts of portfolios, you need to have the full setup and advisers are not going to want to spend all of that money to try and do that themselves. So I think Bespoke is actually a really important area to be involved with as well as MPS and as well as Funds in the years ahead. At bottom right, what we're showing is it's a very fragmented industry, and this is the wealth management industry. The IFA industry is immensely fragmented. There's huge numbers of IFA firms. And you can tell that because there were 30-something private equity back to consolidators working in the IFA space. We buy IFAs and add them into our private client world, but we'll come back to that in a moment and explain how we do that and why we do that and how we do it safely. So I think it's the key. So if we move to Slide 15, this is what I call the Link slide. We've got 3 strategic value drivers. This is what's going to increase the value of the business over time. First of all, organic growth. So we managed 5.2% this year. How can we increase that? We've got a medium-term aim of getting to 8% to 10%. So we'll come on to that in a moment. Service and operational excellence, which is really how do we improve what we provide to clients and advisers and run our business effectively and efficiently. And then the M&A piece as well, which is the inorganic growth, which can add scale, but also our capability to what we're doing. So if we can go to 16, we'll kick off with market-leading organic growth. And there's a couple of really important stats in here. So if you look at half 2 FY '23, you can see that our inflows -- annualized inflows were running at 19.3%. That's the highest we've seen in terms of percentage that I can remember, although in the early days, it would have been those sorts of numbers. But in terms of gross inflows, as I said earlier, that's the highest we've ever seen, which is fantastic. And Andrea touched on the fact that in Q1 of this year, so July and August, we're continuing to see high levels of inflows, indeed July and August were higher than the 2022 equivalents. But you have got the contra to that. The outflows at 13.5% are being affected by a couple of not issues, but cyclical events. And that's really around the movement in interest rates. So we've gone from us not receiving anything on our bank accounts. Interest rates were very close to 0 for a long, long time, and they very quickly moved up into 5-plus percent, which means that you and I can now get over 5% on our cash -- on our money market funds. And critically, our debt has moved from a mortgage rate of 1.5% to a mortgage rate of 4.5%, 5%, even 6%, at one point 6.3%. I think that's the average 2-year fix. So it's very logical for someone to be given advice or to take the initiatives themselves and pay down a bit of that debt. And that is what we started to see in May and June of this year. That's carried on into July and August as well. And I think that's right proper and cyclical. That's where we are in market. So growth flows are fantastic, and we think pipeline looks good. We think growth rates will continue to be strong, but we do expect outflows to be strong as well in this period. Until people see rates roll over and start having some certainty as to what future costs are going to be for them, whether that's living costs or debt costs. So what we've guided to is that in this quarter, we're going to see negative flows next quarter, not sure. And then as the year goes on, we think that we'll move back into a positive phase. This is an industry point rather than the endpoint, but it's an important point, nonetheless, to make. Now I do want to just touch on -- will you just flip back for a moment, Hannah, thanks. But do you just want to touch on why we're getting those really high levels of gross inflows, and they are detailed down in the left-hand side or at least 5 of them are. The partnership culture has usually brought culture full stop [indiscernible] within Brooks, and the partnerships that we formed with IFAs have done for 20-plus years now are really the driver of our success. It's about working with IFAs, not on selling them an investment solution. It's about working with them to make their businesses successful and to provide the greatest profitable outcome to their clients. So that partnership culture alongside an investment proposition, which I think is -- it continually needs to evolve. But where we sit today or I think it's absolutely right for market. The distribution capability we've got there across the U.K. and beyond. The fact that we're continually driving to get improving services to clients and to verify this as well. And critically, the investment process, robust as it is, churns out good, strong results for clients. So client outcomes look good. So if we go to 17, now Hannah, that would be brilliant, thank you. This is -- platform MPS is where the really fast growth is, Andrea mentioned, GBP 1.3 billion of flows in this area in the last year. And over FY '23, we're running at 70% growth. Now 70% growth isn't going to continue forever. That's evident, you just can't do that. CAGRs don't carry on doing that. But we do expect it to continue growing strongly. And we also expect to continue to increase our market share. So we're 1.5% with 1.8% in '21 and 2.1% in '22. Our aim is to be about up to 5% of what is a growing marketplace. So we're excited about the MPS side. I would also say the BPS side is hugely, hugely important to us. So we definitely need to have both of those capabilities. In terms of -- on Slide 18, what we're doing around service and operational excellence. This is mainly around our work with SS&C. So as I said, we moved on to the platform finishing the migration in July of '22. So we have been on that for 14 months now. It is about improving that adviser experience and the services that we can provide to clients, but it is also about scalability. Andrea has touched upon the fact that we've got a cracking bill with SS&C and as we add assets to that platform, we do not add costs, not excessive costs. So that will help us to drive operational leverage and that will drive the overall margin of the business as we carry on through. And then with regards to M&A on Slide 19, this is -- Andrea has mentioned that we undertook 2 acquisitions of Integrity Wealth Solutions and Adroit Financial Planning, both in the IFA space, both building scale, as you can see on the right in private clients. And they come to us with normally with some assets being run by Brooks, that's how we know them. And as I said, we work with both of these companies for a decade. So we knew what we were taking on. And that's highly critical. We have 4 really clear criteria for any acquisition that we're making. They are that we buy quality businesses. So we're not in the business of sorting out fixer offers. There must be the economic benefit in it for us. We must see accretion. The price is going to be right for both parties, not just for us, we could get a great deal, but then the people that have sold to us will think that we've done over, and I think we've been an unhappy relationship. So it's got to be a good deal for both parties. It's got to be strategic value, and I talked to the fact that Integrity, 3 of the senior Integrity leaders are now lead us in our wider business, they have taken roles in Brooks Macdonald Group, which is fantastic. And then the critical point is culture and making sure that they are aligned to our culture before they come on board. And that's where you get. You might have a wonderful strategic fit. But if you've got opposing cultures, you're just going to fight and it's going to blow up and it will be value destruction, which is exactly what we are trying to avoid. So we will carry on with our M&A. We looked at many firms in this last year, and you'll see in the accounts that there's GBP 1 million worth of cost in the P&L for acquisitions that we didn't complete on. That's a difficult decision. But if you get to the point of due diligence where you realize that one of those 4 criteria are not being ticked, you are better off walking away and taking the cost on the chin and spending years and years focusing on remediation rather than on the growth of the business. So I don't apologize for those costs, which I hope will be less in future years. But certainly I don't apologize for that. Just a couple of more points. Consumer duty is a big regulatory piece for the industry this year. There's always 1 every year, but consumer duty this year. And for me, I think this is a real opportunity in the RDR 10 years ago. I believe consumer duty takes that on another step in giving the public more reasons to trust the financial services sector, financial advice, in particular, in the U.K., that they are going to do a good job for them, but they're not going to rip them off because it is all about getting clients good outcomes. And I believe that we are well aligned to it. Regarding principles that you can see on the right-hand side there that we care, that we're connected, we do the right thing and then we make a difference. We've been in place here for 6 years now and absolutely are the foundation of the culture of the business. And I believe that is very aligned to what the regulator is trying to drive through. So it's a big project but we are -- we took it on and we've driven through it. And now it's about making sure that we embed the ideals of consumer duty in the company, which I don't think will be difficult, given the principles. So just to conclude, a couple of slides to conclude. In FY '24, we are expecting net flows to be positive for the year. Gross inflows seem to be really good. Short term, though, we expect gross outflows to be significant to the extent that we expect this quarter to be negative. The mix of business, so taking in lots and lots of business in MPS at 19 basis points and having mild outflows in BPS. And I do mean mild, I think it was GBP 50 million over the year in total in BPS at 85 bps clearly creates a drag on the revenue yield, but not necessarily on the margin. Interest, which has boosted revenues this year. We think we'll be slightly down in FY '24, but only slightly. And costs, clearly, inflation is still a big issue. And we would expect whilst SS&C contracts does have an inflection in it, which is really important, and all of our staff acquire increases and one of the suppliers will be going through inflationary increases. So mid-single digits is where we're aiming there. And then in terms of the future, incredibly positive about the future. You've heard me just talk about the opportunity, then we've got a huge chance to do something really special over the coming years. We are aiming for top quartile underlying profit margin. [indiscernible] we are at the moment, depends on [indiscernible] what you pick, but we're up there aiming for 8% to 10% net flows. I think we're not going to do that this year because of the headwinds that I've mentioned. But the aim will be [ through ] '26, possibly to get to that sort of number and to become a top 5 wealth manager. And demand for the agenda is exactly what we've been talking about with regards to our value drivers. So it's organic, inorganic growth and operational efficiency and providing the best possible service to our clients. And our purpose is to realize ambitions and secure futures for our clients and might -- our aim is to be able to realize ambitions and secure futures very fast increasing client with which we look forward to your questions.

Thank you both for that helpful presentation and for anyone who hasn't yet seen it, we have published research note on our website with updated forecasts, which you can find at Equity development. So on to questions. What drives flow in MPS, i.e., why are you winning share?

Yes. Good question. And I think if you -- on that market, that organic growth slide, I think the 5 points down the left-hand side are really the key. Its partnerships when you are working against other firms in that MPS space, there's 3 areas you have to look at. One is around to your performance and our performance is robust. It's been long-term performance. So we stack up well there. It's on price. And everyone's pretty much in the 15 to 25 basis points while we're at 18.8 average, 20 is our standard. We have an IFA come to us with a couple of hundred million. So you discount when you've got those sorts of numbers going in. But those 2 things are pretty homogenous. Most people are in the right sort of ballpark. So it comes down to the service that you're providing. And as I'm saying, you walk into an IFA and you talk to them about not about selling them an investment product or an investment service. You talk to them about what are you trying to achieve with your business and what are you trying to achieve in terms of your client outcomes. And then you start from there. So you talked to them about what an investment service might look like to help them achieve what they're looking to achieve. And then you talk to them about what else we can do to help them. So can we help them with regards to marketing to new client segments. Can we help them with regards to consumer duty, how are you dealing with consumer duty. This is what we've seen. This is how we can help you. And we don't do consultancy, but I have IFA CEO who is bringing me up going. This is what I've seen, what you are seeing, how are people dealing with this, all of that sort of stuff, which is all about partnership. And to be honest, partnerships are just so much more enjoyable than a selling tool relationship. So that's how we like to work with people, people and I think that comes over. I think that's why we're successful.

Thank you. Perhaps as an adjunct to that. How much of the market trend of growing MPS and a decline in BPS is left to run? And perhaps -- and how close are we to point where the switch between the 2 stops.

I think it's got a bit of a way to go. Now -- so if you are running standard BPS, old-school BPS, let's call it, then I think there will be outflows to come. But I don't think they're huge. What you're seeing is advisers moving away from undertaking advisory investment management where they make -- where they're running the portfolios and they send an e-mail out to their clients and ask their clients to email back saying, "Yes, okay, you can make that change." They're moving away from that, partly because what an enormous pain it is to try and run a business like that, and partly because they're taking all the risk of the investment management on their own shoulders. So there's a realization especially in the financial planning and actually outsourcing that risk is good for them in their business. So the first main driver of the MPS flows, the BPS, it's not so much how much you've got leaving. It's the reality that advisers have shifted from BPS as the default solution for outsourced to MPS is the default solution for outsourced. But I think actually, it's right. So MPS and multi-asset funds actually, in the accumulation phase, when you don't need anything special, you don't need bells and whistles. It's entirely appropriate. You can do a pretty low cost. You're putting money in it every year it grows, you don't pay much attention to it. Your adviser says you should do this, that and the other and you crack on. At some point, you'll get to -- or hopefully, you'll get to a point where either the size of the pot is such that you need Bespoke advice because you've got money in your own name, you've got it in an [ NNIs ], so that you've got [indiscernible]. So it matters what types of assets you have in each of them. So you need to own Bespoke for that. We you might need something Bespoke in terms of the relationship because you're valuable client and do you need more explanation, more handholding through the process. Or and I think this is where BPS will really find its place is in the decumulation phase. So where you've been accumulating for 30 years and then you're about to go into actually taking an income from your assets, that switch point is very -- you are very vulnerable during it. The sequencing risk is enormous. If you have big market moves, whilst you're making that shift, it can be really painful and really affect your long term -- the long-term ability of your portfolio to provide an income. So I think we've produced a service, which we've been running for 3 or 4 years now, which is specializing in getting through that period and providing an income in retirement. And that needs to be done on a Bespoke basis. And I think there's a real opportunity for that. So I don't think it's the death of BPS, BPS has definitely still got a place to play, but it is -- I think it's the specialist situations going forward rather than it just being the default solution.

Extremely helpful. The trend of outsourcing to advisers, the investment management piece. You obviously just touched on it now. But and it sounds like it's still strong, but how much of the low-hanging fruit has been captured and is this an uphill struggle to get the rest of switch at this point?

Well, we're not finding that. The pipeline for our investment solutions, say partnership business, Brooks Macdonald Investment Solutions is, it still looks very significant, having lots of conversations with people about moving away from their management to [ ours ]. And the stats I got through the other day, I think it's in the platform statistics, but 34% of firms are still running on an advisory basis. So I think a lot of those are going to make that shift as we go through the next few years. So I wouldn't be at all surprised if rather than meeting each other's launches as wealth managers, we've still got that outsourcing shift to come from, let's say, half of that group and maybe 20% of the total. And then remember that all those people that are outsourcing the new money all the time. So what we're seeing in our MPS flows is you might have a bulk transfer, and that might be GBP 50 million, GBP 60 million or GBP 150 million, but then you're also getting the monthly flows coming through. So we were starting off. I mean only 3 years ago, it was sort of GBP 10 million a month coming into MPS through normal flows. There is multiples of that now, every month. So it's -- I'm still very positive about that for quite a period.

Loud and clear. Okay, onwards. What is the future of your Channel Islands business? And will it become a larger part of the group or might you consider selling it?

Yes. All good questions. So what we're doing with it is that we have -- we've been reorganizing it. It's a difficult market, the international, and we've taken the view that the priority for the business should be the private client wealth on [indiscernible]. So it is a very fragmented set of Islands in terms of the companies that are actually providing for clients. There's no leadership there. We strongly believe that we can step into those shoes. So I'll give you an example. In the U.K., SJP is generally recognized as being the leader in wealth management. There isn't an SJP out there. And I strongly believe that we can pick up on the good things that SJP do in the U.K., and we can do the other things even better than they do internationally. So I think there's a leadership opportunity there for us. We always look at all parts of the business and validate their part in the group on an ongoing basis. So if we felt it was the right time to sell it, we would sell it. But actually, I think there's a really good opportunity there.

Okay. Well, you raised SJP, which leads me into this question. In the context of consumer duty and the challenge to James' Places fees, is there a huge opportunity for your private client business to take some of their business?

Well, I think they will have to figure out to get rid of the exit penalties. Until that happens, it might be a bit difficult. But I do think I'm not going to talk too much about SJP. They've got a brand-new CEO who started -- he starts first of October, actually, doesn't he? Who we know is a very high-quality operator. He'll get his teeth into that in due course. But the -- I don't think we need to worry about taking clients from other people as well as our name gets out there to being a really quality operator in that private client space, I've no doubt we will take clients from various competitors. But I think the priority for everybody should be new business for people who aren't taking advice at this point in time. If people are getting advice from wherever it is, that is a better place than getting no advice at all. Given the restrictions that the regulator puts around us, you shouldn't be getting ripped off with one of the -- sorry, ripped off is wrong, you shouldn't be getting bad advice or mis-sold advice from many of the main operators, whether you're overpaying is another thing. But just making sure that people are getting advice things got to be the priority to our getting out there, getting our name out there, talking to the right to serve people. So things like we're the financial well-being partner for the Professional Creditors Association with a financial well-being partner for the Family Business Association those sorts of initiatives, I think, it is in front of the people who have got wealth, but actually aren't taking advice. Most people, and I'm sure this is the case on the call and I've gone through their careers, just accumulating stuff. And then it's what do we do with all of it. And that's really -- I mean, ideally, take advice from the staff. But at that point where you think what do I do with all of this, you've really got to sit down and take some proper advice.

Okay. One for you, perhaps, Andrea. Underlying margin has dropped off quite sharply this year. How quickly do you see a recovery? And do you think you can get it to over 30% in the medium term?

It's a good question. So yes, so the underlying margin has dropped. I mean, there's a combination of factors buying that, including the market, so which Andrew has really covered. And I've got confidence in the future. This year, I think, will be challenging because of the macroeconomic conditions that we're all facing high interest rates. But when -- this is -- for me, I keep things quite simple. It's the income and cost jaws as long as we can grow revenues and flows and keep our costs, which we do really in focus and there is huge potential for this business to increase operating margin over the medium term. I do feel this year will be a challenge [indiscernible]. But if we stand here today, we look at our peers, we're in a good position currently. Everyone will be facing the same factors. But up to SS&C that leverage point, keep our cost down growing volumes through that platform will help us towards a higher margin. Certainly, what we're all aiming for.

Yes, absolutely. If we can make some judicious acquisitions that increase the funds under management on the platform, then 30% is definitely within grasp and beyond.

Okay. Thank you. A pushback here on the BPS service. If the service is so good, why are you losing higher-margin BPS business at 85 bps?

Yes. So I do think it is this shift in dynamic between BPS and MPS and accumulation and specialization. This is about having the right service in the hands of the client at any point in their investing life cycle. And I think if you've got a 45-year-old in BPS with GBP 0.5 million here's a need to be in BPS, paying 85 basis points. You should be paying 20 basis points. And gross platform cost has probably 45 basis points, something like that. And that's really one of the things that I can see the duty and RDR before we've been trying to drive, trying to make sure that people are in the right service. So we're not seeing much of a shift there. And once people have got a relationship with somebody, they like paying for it. It's not something that they want to move from. But you see a small amount of that. And then you've got the normal reality of things, which people -- and I think it's a terrible thing, but people need to spend some of them and need to live on. So if you're in a Bespoke portfolio and you're in retirement, you need an income. So there's a natural level of attrition in these portfolios. And that doesn't mean clients leave, but it just means we might be paying out 4%, 5% a year to clients so they can pay their heating bill.

An important thing to pay. Right. This is looking like the last question in the -- oh, hold on, well, I think very persistent on the BPS point. It's 50% of AUM. The -- what's the churn? I think you've largely touched on that. The churn is headed to MPS and natural attrition. So let's move on to one here on acquisition. There is really a focus on growing the financial planning -- private client business with the Adroit and Integrity acquisitions. Is there also an opportunity to move FUM from the external providers they use to Brooks Macdonald? And if so, isn't it worth pursuing a larger adviser acquisition?

It's a really good question. So we look at investment managers and financial brands in terms of acquisition. And it looks different in terms of what you choose to buy. In the investment management world, it makes much more sense to buy scale. So you don't want to be buying GBP 200 million, GBP 300 million investment managers with possibly slightly eclectic investment processes and the like because we're only going to have one process for one set of clients, and they will be ours so they need to conform with ours. So you're limited in the number of people that you'd want to bring on. And if you're going to go through all of the work, you might as well make it big acquisitions. So the scale is quite important there, which means that you don't do very many of them. Might look at a few, but you don't do many. Now on the financial planning side, it's contra to that. So if you take on an IFA with GBP 5 billion worth of assets, within that, you're going to have hundreds of advisers, and that makes it quite difficult to culturally bring all of those advisers on and keep those advisers happy. You're actually better incrementally adding people, so you can spend the time with bringing them into the business and make them feel part of Brooks as you go through the process. So -- I mean, Adroit was GBP 350 million, Integrity GBP 275 million. I think there's a sweet spot up to probably GBP 1 billion of assets under advice. So we're looking from GBP 100 million to GBP 1 billion, somewhere in the middle of that is likely where we end up. So and that's much. We're here for the long term. And if it's just a case of consolidating, so you can sell the business on a slightly higher multiple, which is what the consolidators do, then they're fine. That's not our raison d'etre as is to build a sustainable business, which provides great service to its clients over a long time period.

Well, thank you very much for that helpful Q&A session, a reminder to our viewers to fill in feedback form when we end the webinar, and we look forward to catching up with both of you in 6 months' time.

Cool. Thank you, Hannah, and thank you very much, everyone, for listening. And your questions.

Thank you, all.