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Frenkel Topping sets out five year plan to double in size

All its work comes from either lawyers or barristers.

Personal injury claim
Frenkel works on claims from beginning to end

Most of us will be fortunate enough not to suffer a life-changing injury that needs compensation, but Frenkel Topping Group PLC (LON:FEN) is there for the unlucky few who do.

The independent financial adviser (IFA) has been dealing with just this type of event for around 30 years.

It’s a specialised niche of the financial services market but one that offers plenty of growth opportunities believes Richard Fraser, Frenkel’s chief executive.

WATCH: Frenkel Topping seeing benefits of 2018 investment and looking to widen market reach

The company handles all aspects of a claim from pre-settlement work, expert witness statements and court appearances through to managing the funds once a payout has been made.

All its work comes from either lawyers or barristers.

Being part of the whole process from start to finish helps it win two-thirds of fund management mandates when a decision about an award has been made, says Fraser.

“The most critical times in the process are the early stages and dealing with the loss of earnings after an accident or injury.”

That involves navigating the maze of benefits and dealing with the DWP and local authorities.

Expert witness

Frenkel gets paid for its expert knowledge on issues such as how to structure a settlement, loss of earnings and pensions while they also act as a pipeline into the assets under management (AUM) side of the operation.

“We have our discretionary management arm and we will go and advise the client post-settlement the best way that the money should be invested.

“This will be a very low-risk strategy as it has got to last a lifetime.”

At the end of the last financial year (to December), assets under management were £779mln of which the discretionary portfolio accounted for £302mln.

Since then, the total has risen to around £850mln with £340mln in its discretionary arm.

Fund arm growing

Fraser sees £100mln of AUM growth each year as a do-able target going forward.

Expert witness work is another area for expansion.

Revenues here jumped a third last year, with a recently introduced graduate scheme giving the business a boost.

There is also a 'great opportunity for M&A' in the independent financial advisory universe.

Increased regulation is coming both from the government and from the Financial Conduct Authority, while the amount of technology investment required nowadays is something that small IFAs struggle with.

“So we feel there is an opportunity for the right IFA to come and join with us and where we overlay our specialism of the personal injury work.”

“For an IFA firm with between £50mln to £300mln of assets under management we have a lot of exciting prospects at the moment

“Add that to our organic strategy and we feel we can double in size again.”

Ambitious targets 

At present, all the money Frenkel manages come from its clients but there is an opportunity for fund management arm Ascencia to build up its base.

Fraser also wants to digitalise the business and to develop the graduate scheme further and especially to encourage more women to enter the financial services sphere.

Socially responsible investing is also something increasingly important to the business.

Fraser is aware there is some rebuilding needed with the City after two profit warnings last year sent the share price tumbling.

This year has seen a rally and at 35.5p the share price is well above the lows seen a year ago.

Based on last year’s dividend the yield currently is 3.3% while the group is valued at £26.8mln.

A key for this year will be to meet the market’s £2.1mln estimate for underlying profits but beyond that Fraser is confident the five-year target can be achieved and that the plans in place are being recognised.

“There’s so much we can do here.”

Quick facts: Frenkel Topping Group

Price: 33.2 GBX

AIM:FEN
Market: AIM
Market Cap: £25.08 m
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