Frenkel Topping widens strategy as turnaround continues

Specialist independent financial advisor and asset manager Frenkel Topping provided a strategic update for the group on Wednesday.

The AIM-traded company said that, since the changes to the executive team during the last few months, the board had undertaken a detailed review of the company's activities and competitive advantages.

As a result of that, the directors of the company believed that the potential addressable market available to the firm ws broader than that which the it had historically targeted, being a focus on medical negligence or personal injury cases.

As a result, the board had made investments in the company's cost base to reflect a restructuring along a number of core business lines.

The board said Frenkel Topping would continue to offer expert witness and independent financial advice to clients who had suffered personal injury or medical negligence claims as an established market leader.

Frenkel Topping Investment Management would continue to offer low-risk investment products that were designed to preserve client assets, but also offers higher return products that were more exposed to equities.

The company would continue to seek to expand FTIM's offering beyond the current three core portfolios offered, the board said, and would seek to expand FTIM's services to a wider audience.

A recently-launched new business, Obiter Wealth Management, would offer financial advice to clients who were in receipt of large lump sums that they had a need to invest.

Frenkel Topping said those clients could include the former owners of family businesses that they had recently sold, divorcees, retirees who were in receipt of a large lump sum or may need to invest their pension pot to provide income in retirement, and charities who needed to invest in “very safe” assets.

“In order to permit the growth in the company's existing business and the new activities referred to above, the company has increased its cost base slightly this year and will continue to do so in 2018 and beyond,” the board explained in its statement,

“This will allow investments in information technology, compliance, marketing and additional hiring.”

Adding to the current infrastructure was expected to deliver disproportionate growth in operating profit in the medium term, the board added, as the company was able to significantly increase the amount of assets under management that it was able to target and potentially with shorter sales cycles than was currently the case, as it moves into targeting new end clients through Obiter.

As part of the changes to its strategy, the firm would have a lesser focus on utilising its cash resources to drive investment profits - including property revaluations - which had assisted it to trade broadly in line with its market expectations, as announced on 14 November.

The group also announced that it has accepted the first intake into its graduate development scheme, who - over a two year training programme - would gain experience in all aspects of the business and would obtain the initial qualifications they needed to become the investment advisors of the future.

Frenkel Topping said most of those selected for the programme were existing employees, adding that the expectation that existing personnel would be considered for new positions helped staff morale.

In addition, the improved workplace offered in its new offices, improved information systems provided by its investment in technology and attractive employment terms all helped staff retention, which the board said it believed was important in driving the long term success of the company.

“Since the new executive team has been put in place, we have thoroughly reviewed the company's strengths and the best way to leverage Frenkel Topping's competitive advantage in servicing vulnerable clients,” said executive chairman Paul Richardson.

“The company benefits from a high proportion of recurring revenue, which provides us with the confidence to make additional investments in Frenkel Topping's infrastructure.

“Whilst this will result in some increased costs, we believe that the addressable market will be greatly increased and we expect that these investments will drive significant additional revenue growth and drive a significant increase in shareholder value.”