Brooks Macdonald’s flow rebound points to wealth-manager stabilisation

Brooks Macdonald has delivered the early signal UK wealth investors wanted: positive net flows after two difficult years for discretionary managers. The group reported £226mn of net inflows for FY 2026, a £622mn improvement from FY 2025’s £396mn outflow, while funds under management and advice rose 14% to a record £21.7bn.¹

That matters beyond Brooks Macdonald. For UK financials investors, the result suggests adviser-led wealth platforms and discretionary fund managers may be stabilising, provided they can combine credible investment performance with deeper financial-planning relationships. But the recovery remains fragile. Bond-market volatility, lower client trading activity and cautious retail sentiment still constrain revenue quality and multiple expansion.

The company’s results-day message was deliberately focused on momentum. Brooks Macdonald said FY 2026 was its first year of positive net flows since 2023, with the second half contributing £224mn and Platform MPS continuing to grow strongly.¹ The fourth-quarter update had already shown the inflection: Q4 net inflows were £167mn, the strongest quarter of the year and the third consecutive quarter of improving flows.¹

Flows are the key signal

For wealth managers, flows are the cleanest read-through on client confidence. Market gains can flatter assets under management; net inflows show whether clients and advisers are allocating new money.

On that measure, Brooks Macdonald’s improvement is meaningful. Total FUM rose 17% to £19.3bn, while market and investment performance contributed £2.5bn over the year.¹ The company also said its investment performance outperformed the Morningstar PIMFA Balanced Index, giving advisers a clearer reason to place client assets on its propositions.¹

The composition of growth is important. Platform MPS FUM increased 35% to £8.0bn, and the group cited a 15% annualised net-flow growth rate for PMPS.¹ This is the area investors should watch most closely. Model portfolio services are scalable, adviser-friendly and better aligned with platform distribution than legacy bespoke mandates. Sustained MPS growth would support operating leverage, even if yield on assets is structurally lower than in bespoke discretionary management.

Bespoke Portfolio Service remains more mixed. BPS FUM rose 9% to £9.3bn, but the company’s own presentation points to net outflows, albeit with about a 50% improvement versus FY 2025.¹ That makes BPS less of a growth engine and more of a retention and margin-management story, especially among larger portfolios, where Brooks Macdonald said clients with more than £1mn increased by 15%.¹

Financial planning is becoming the strategic hinge

The most persuasive part of the investment case is not simply that flows turned positive. It is that Brooks Macdonald is trying to change where those flows come from.

The group has completed the integration of Brooks Financial, creating what management describes as a scalable, whole-of-market financial-planning capability.¹ Financial-planning income rose to £28.6mn in FY 2026 from £17.1mn in FY 2025 and was up 10% on a like-for-like basis. It now accounts for roughly a quarter of group revenue.¹

That mix shift should be strategically valuable. Financial planning gives a wealth manager more reasons to engage clients beyond investment performance alone, including retirement income, tax planning, intergenerational transfers and drawdown needs. Those relationships can be stickier than pure investment mandates and may lower redemption risk during volatile markets.

Brooks Macdonald’s integration data supports that thesis, but does not yet prove it. Advised assets rose to £5.7bn, and advised-and-managed assets increased to £3.3bn, equal to 58% of advised assets versus 51% a year earlier.¹ In other words, a larger share of financial-planning assets is now also being managed by Brooks Macdonald. That is the cross-sell dynamic investors want to see.

The operational story is also cleaner than it was. The company said financial-planning synergies reached £1.3mn and that efficiency actions helped offset inflation, variable pay and regulatory costs.¹ Underlying costs still rose to £90.3mn from £85.2mn, but underlying profit edged up to £29.0mn and underlying EPS rose to 137.9p.¹ This is not yet a dramatic margin-rebuild story. It is a stabilisation story with a route to operating leverage if flows persist.

The bond backdrop remains the main risk

The timing of Brooks Macdonald’s results is awkward. The company is reporting better client momentum just as bond volatility is again undermining investor confidence.

On 2 September, the day before the results, European shares fell as global bond yields and oil prices rose, with Sharecast reporting renewed pressure from inflation worries and higher borrowing costs.⁸ By the close, 10-year yields in Germany and the UK were reported at their highest levels since 2011 and 2007, respectively, while Brent crude climbed above $95 a barrel.⁹ Interactive Investor described a market set-up in which global equities fell while bond yields kept rising.¹⁰

That matters for three reasons. First, higher yields can depress valuations of listed wealth managers by lifting discount rates and increasing the appeal of cash and bonds. Second, volatile bond markets can hurt multi-asset portfolio performance, particularly for cautious and balanced clients who expect fixed income to dampen risk. Third, uncertainty tends to reduce retail engagement, weighing on transactional and FX income.

Brooks Macdonald’s own numbers already show that pressure. Transactional and FX income fell to £9.1mn from £14.0mn, while interest income dropped to £6.0mn from £7.6mn as average rates declined.¹ Fee income and financial-planning revenue more than offset that, but the revenue mix shows that not all parts of the model recover at the same speed.

What investors should watch next

The next question is whether FY 2026 was a cyclical bounce helped by stronger markets, or the start of a more durable distribution-led recovery.

The bull case is straightforward. Brooks Macdonald now has record FUMA, positive net flows, stronger MPS momentum, better investment performance and a financial-planning arm that can feed managed assets.¹ If adviser relationships deepen and PMPS flows remain positive, the group should be better positioned than pure discretionary managers reliant on legacy channels.

The bear case is that investor caution returns quickly if bonds remain volatile. A large part of FY 2026’s FUMA growth came from market and investment performance rather than flows. Net inflows of £226mn on £21.7bn of FUMA are encouraging, but still modest. The company’s medium-term target of 5% annualised net inflows therefore requires a further step-up from current run-rate levels.¹

Investors should focus on three indicators over the next two updates: whether BPS outflows continue to narrow, whether PMPS growth remains in double digits, and whether advised-and-managed assets keep rising as a share of Brooks Financial’s asset base. If all three improve, Brooks Macdonald’s return to inflows will look less like a one-off and more like evidence that the UK wealth sector is stabilising.

For now, the conclusion is cautiously positive. Brooks Macdonald has shown that performance and planning-led distribution can offset some pressure from cautious clients. But in a market where rising yields are again unsettling multi-asset investors, the recovery still needs confirmation in fresh money rather than market beta.

Brooks Macdonald’s flow rebound points to wealth-manager stabilisation

More from Siften Finance

Baowu’s Jimblebar Interest Is About Commodity Security, Not BHP Housekeeping

Things to know

Comments

Source Material

Flows are the key signal

Financial planning is becoming the strategic hinge

The bond backdrop remains the main risk

What investors should watch next

Key topics covered

UK Retailers Face Footfall and Margin Squeeze Before October Budget

Spire’s £1.03bn take-private bid puts UK healthcare valuations to the test

China’s Treasury Buying Is a Carry Trade With a Currency Signal