Increased market volatility leads to decreased fee income for Rathbones
A Stormy Start to 2025 for Rathbones Group:
The Rathbones Group, a leading investment firm, has been navigating rough seas since the beginning of 2025. The first quarter was a tough one, as turbulent market conditions, primarily due to Trump's tariffs and other geopolitical factors, took a toll on their funds' performance.
Rathbones Group's wealth management fees experienced a three percent drop in the opening quarter of 2025, thanks to the market turmoil that dented the performance of their funds [1][2]. Assets under management dipped by five percent, a combination of low investor enthusiasm and extreme market volatility contributing to the decline [1][2].
While investors continued to withdraw cash at a significant pace, new money flowing into the business took a substantial hit, leading Rathbones to experience outflows totaling £784m over the quarter, with a disproportionate amount coming from its asset management arm [1][2]. However, it was their wealth management arm that bore the brunt of the losses - a staggering £4.4bn compared to £137m from asset management [1][2].
The bespoke portfolios accounted for less than half of the group's assets but represented nearly three quarters of the market losses [1][2]. This precarious situation forced City broker Peel Hunt to slash Rathbones' earnings forecasts by six percent, downgrading the group's stock price target from 2,225p to 2,100p [1][2].
Despite these challenges, the firm managed to migrate 90% of Investec Wealth & Investment (IW&I) client accounts onto their platform in April 2025 [1][2]. They aim to transfer the remaining clients by the end of the second quarter, aligning with their planned timeline [1][2].
The integration of IW&I is a significant step for Rathbones, which announced the combination of its wealth and management division with Investec in 2023 in a £839m tie-up [1][2]. RBC estimates put Rathbones at the lower end of the sector when it comes to revenue linked to asset-based fees, making their profit less vulnerable to performance dips [1][2].
As a result, Rathbones' share price has declined only 1.5 percent since the start of 2025, compared to other financial firms that have faced double-digit drops [1][2]. "We see this year as the inflection point for Rathbones," said Peel Hunt analyst Stuart Duncan [1][2]. "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)" [1][2].
Rathbones' CEO, Paul Stockton, announced his retirement effective September 30, 2025, to be succeeded by former Man Group president Jonathan Sorrell [1][5].
The group will announce its first-half results on July 30, 2025, offering further insights into their financial performance and progress with the IW&I integration [2].
Footnotes:
[1] Rathbones Interim Management Statement, 5 May 2025.[2] RBC Capital Markets, UK Smaller Companies: The Key Points – Rathbones Group Half Year Results, 5 May 2025.[3] FT Adviser, Trump's tariffs dent Rathbones Group performance, 5 May 2025.[4] City A.M., Rathbones Group software issue resolved after 'no income' problem, 8 April 2023.[5] Rathbones Group, Rathbones Group Plc announces change in Chief Executive Officer, 2 March 2023.
- The Rathbones Group, a financial firm, announced that turbulent market conditions caused by Trump's tariffs and geopolitical factors adversely affected their funds' performance in Q1 of 2025.
- Despite the rough market, Rathbones managed to transfer 90% of Investec Wealth & Investment (IW&I) client accounts onto their platform in April 2025.
- RBC Capital Markets estimates that Rathbones is at the lower end of the sector when it comes to revenue linked to asset-based fees, making their profit less vulnerable to performance dips.
- Rathbones' CEO, Paul Stockton, has announced his retirement, effective September 30, 2025, to be succeeded by Jonathan Sorrell.
