Frenkel Topping has announced it is restructuring its business after changes to clinical negligence and personal injury claims rates materially improved the outlook for the specialist IFA and asset manager.
The Manchester-headquartered business announced this morning it has completed its second strategic review for the year, led by its new executive chairman, Paul Richardson, who was appointed in October.
Its first strategic review was abandoned over the summer due to industry changes.
In a market update today, the AIM-listed company said it would continue to provide advice to clients who have suffered personal injury or medical negligence claims, but will also expand its target market through its recently launched business Obiter Wealth Management.
The new division will offer financial advice to clients with large lump sums to invest, such as former family businesses owners that have recently sold, divorcees, retirees with large pension pots and charities who need to hold safe assets.
The IFA says it will add to the existing three core portfolios currently offered through its investment management division, including higher return products more exposed to equities.
The market update says the changes will add to the cost base this year and in 2018, but says they will deliver “disproportionate growth” in operating profit in the medium term.
The company’s first strategic review of the year was announced in April, when it told the market it was looking for a potential buyer. However, in June it abandoned discussions with potential acquirers due to changes to the Ogden discount rate, which it said would “materially alter the landscape of the industry”.
The discount rate changes translated into higher levels of damages available to clients, which prompted Frenkel Topping to increase its forecasts for AUM.
Richardson says the latest review thoroughly examined the company’s strengths and the best way to leverage Frenkel Topping’s competitive advantage in servicing vulnerable clients.
“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,” Richardson says.
“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.”