Rahim Karim, financial services equity research analyst at Liberum, told Financial Planning Today that although Liberum sees selective opportunities among investment platforms, its preference is for wealth managers.
With the wealth management sector it has a clear preference for those with Financial Planning-focused models.
He said: “We think that those managers that engage with the purpose of helping their clients plan for future life event circumstances, rather than just help manage their current investments, will end up winning. Specifically, we see it resulting in a strong and more entrenched relationship which typically also results in better outcomes – both for the client and the manager.
“With respect to the latter, the potential to capture and generate higher flows is important, in our view.”
Mr Karim said he also expects to continue to see merger and acquisitions activity continue between smaller Financial Planning firms.
He said: “The market is extremely fragmented and see a number of larger players making selective acquisitions of quality businesses with complementary offerings/clients.”
According to a research report from the investment bank, wealth management firms with a greater exposure to Financial Planning such as Brewin Dolphin and AFH Financial are the best placed to perform operationally and financially, according to the investment bank.
The bank has also highlighted Quilter as “well placed to emerge from this year as a leaner and more focused business” and Premier Milton as “well placed given its targeted cost-savings and the enhanced distribution capacity.”
The bank said that it continues to prefer wealth managers to investment platforms given the lower relative multiples and exposure to the same structural growth drivers.