Business performance and financial update
Against a challenging backdrop at the start of the year, business performance improved steadily as the half progressed.
Wealth Management recorded net inflows of £0.4 billion in the second quarter, with Discretionary & Managed net inflows of £0.5 billion, demonstrating stronger client asset retention and momentum in new business activity. This offset first-quarter outflows, resulting in broadly neutral net flows for the first half overall. Asset Management net outflows of £0.4 billion in the second quarter were similar to the first quarter, reflecting continuing industry-wide pressure on active equity strategies. While this has weighed on flows across active managers, the business continues to see encouraging engagement across new distribution channels, including Discretionary Fund Managers, institutional and international markets, supporting future growth opportunities.
Operating income increased by 8.6% to £487.5 million, driven by higher investment management fees, stronger commission income and an increase in Financial Planning revenues. Revenue growth outpaced cost growth, resulting in underlying profit before tax increasing by 14.4% to £123.2 million and the underlying operating margin improving to 25.3%.
Acquisition and integration costs of £9.5 million (30 June 2025: £23.2 million) continued to reduce as expected as we moved beyond the integration phase of Investec Wealth & Investment. During the period, we also recognised £19.0 million of costs relating to the FCA Skilled Person Review. After taking these non-underlying costs into account, profit before tax for the first half was £72.1 million, increasing 15.7% relative to the first half last year.
The second half of 2026 will be affected by the cost of the actions announced on 16 June 2026 in relation to the Skilled Person Review. These actions include the cessation of charging fees on the cash element of portfolios, which we continue to expect will reduce income and operating profit by c.£9m over the six month period. Lower technology costs, following the expected completion of the implementation of Salesforce by the end of the third quarter, along with the delivery of ongoing cost efficiencies, are expected to support second half performance.
The cessation of charging fees on the cash element of portfolios is expected to reduce the underlying operating margin for the second half of the year by 1.3 percentage points. The Q4 operating margin target has therefore been revised from 30.0% to 28.7%. The Group remains on track to achieve the revised target, subject to conditions set out previously relating to FUMA growth, inflation and interest rates. The Group's progressive dividend policy remains unchanged.
Regulatory update
As announced on 16 June, we are implementing a programme agreed with the FCA to address the findings of a Skilled Person Review. Since that announcement, our priority has been to mobilise this work while continuing to support clients and colleagues. We are approaching it with rigour, urgency and transparency, and have made good initial progress over the past six weeks.
Client reaction has been resilient. We have identified no material client outflows attributable to the programme, commercial activity remains stable, and colleague retention remains within normal historical experience. While we remain vigilant, these are encouraging early indicators.
We have redeveloped our Customer Risk Rating (CRR) methodology, which underpins our Enhanced Due Diligence (“EDD”) process. We have commenced our file review pilot, which we expect to be completed by the end of August. Once complete, we will proceed with the remediation of the approximately 4,700 restricted EDD clients who will be released from restrictions on inflows as they are remediated. We expect to have completed the review work for the restricted clients by the end of the year.
We have also agreed on the methodology for the targeted client review and will shortly commence an initial sample review of client outcomes.
The programme reinforces our strategy. Many of the actions now underway, including streamlining governance, improving client data, simplifying processes and enhancing controls, are closely aligned with the priorities we set out in February and will help create a stronger, simpler and more effective Rathbones.
The expected financial impact of the programme remains in line with that announced on 16 June.
Progress against our strategic priorities
Five months into our strategy, we are making tangible progress across all four priorities. The strength and depth of our refreshed leadership team provides a strong foundation for the continued delivery of our strategy.
The first choice for clients
Our focus is on delivering a world class investment capability, advice and solutions honed for the entire client lifecycle, and delivering a more personalised and effortless service experience.
Following Robert Sears’ appointment as Chief Investment Officer, we launched a review of our investment proposition and operating model to improve consistency, scalability and competitiveness. We have simplified our investment governance and continue to enhance our investment capabilities, with Investment Grade Credit and Private Markets strategies planned for launch later this year.
In Wealth Management, our client portfolios continued to outperform the reference ARC benchmark on a weighted annualised basis over three and five years. In Asset Management, 71% of our AUM outperformed their benchmarks over one year and 62% over three years. We have also continued to improve the value for clients. During the period, we progressed negotiations with third-party fund managers and continued switching client assets into cheaper share classes. As of 30 June 2026, we have negotiated an average reduction of one third of the cost in underlying OCF (Ongoing Charges Figure) of external managers’ funds since the start of the process.
Financial Planning continues to represent a significant growth opportunity. Clients benefiting from both Investment Management and Financial Planning continue to demonstrate materially stronger growth characteristics, generating net inflows every month during the period and delivering c.4% annualised growth in assets compared with 0% across Wealth overall. We continued to progress a more integrated wealth management model during the first half. This enables us to provide more joined-up advice, make better use of specialist expertise and support more clients with their financial needs as they evolve at different points in their lives. We are planning to launch an on-demand advice service to complement our one-off and ongoing advice services, making financial planning support available to a broader range of clients, at the right time in their life circumstances.
Client advocacy remained strong, with a Trustpilot rating of 5/5 (2025: 4.9/5). We continued to enhance our digital capabilities and the resilience of the MyRathbones app, which now has more than 60,000 users, with average monthly usage up 6% and client satisfaction at 8.5 out of 10.
Looking ahead, we will continue to enhance MyRathbones with new ISA subscription tax allowance tracking, richer performance reporting and data visualisation, expanded self-service capabilities and greater consistency across web and mobile channels.
The first choice for talent
Exceptional client outcomes depend on exceptional people. We are committed to strengthening our culture, providing motivating incentives and creating an environment with AI-powered tools and processes that make doing business easy.
We continue to invest in colleague development and engagement, helping Rathbones remain an attractive place to build a long-term career. Retention of high-performing colleagues remained above 95% during the period while colleague advocacy continued to improve. We have strengthened leadership development, enhanced career pathways and introduced a new remuneration framework designed to better reward growth, collaboration and long-term value creation.
We reached an important milestone in developing the Rathbones Institute, completing the design phase and appointing its Head. We also established a partnership with a leading learning and development provider to support a scalable digital learning platform. We expect to launch the first pilot cohort in the new year, creating a structured pathway for future talent development.
AI adoption has accelerated rapidly across the Group, with monthly usage of enterprise-approved tools increasing from 22,000 hours in February to more than 56,000 hours in June. The benefits are already becoming evident through faster marketing delivery, improvements in software development, suitability processes and analytics. Our focus is now shifting from adoption to measurable productivity improvements.
The most effective operator
Building a simpler, more productive organisation remains central to our strategy. In February, we committed to better data-led commercial excellence, simplifying our operations and ensuring capital efficiency.
During the period, we completed a Time and Motion review across our Wealth business, which found that advisers currently spend approximately half their time on client-facing activity, thereby establishing a clear productivity baseline. There is an opportunity to reduce the administrative burden further, allowing advisers to spend more time with clients.
Our Salesforce implementation remains on track for launch by the end of the third quarter and will further simplify client servicing across the business. Meanwhile our “Cubs” business development programme continues to build momentum, generating significant volumes of client and prospective client interactions, new assets under management and pipeline during the period.
At 30 June 2026, our capital surplus was £166.0 million (£178.4 million at 30 June 2025) and our CET1 ratio was 16.8% (17.4% at 30 June 2025), reflecting the continued strength of our balance sheet and capital generation. During the period, we launched a further share buyback programme of up to £20 million, which concluded on 13 July 2026. Alongside the buyback, the Board has announced an increased interim dividend of 32.0 pence per share, 3.2% higher than the prior year and consistent with our progressive dividend policy.
As previously announced, we expect to recognise approximately £60 million of costs over the next two years associated with the actions relating to the Skilled Person Review and FCA programme announced on 16 June, which are expected to be treated as a separately disclosed item within non-underlying costs. While this represents a near-term headwind, acquisition and integration costs relating to the combination with Investec Wealth & Investment continue to reduce significantly as we move beyond the integration phase. As a result, the underlying earnings and capital generation profile of the Group continues to strengthen.
We will continue to maintain a strong balance sheet, invest selectively in long-term growth opportunities, maintain a progressive dividend policy and return surplus capital to shareholders where appropriate.
The most reputable brand
Trust remains one of Rathbones’ greatest competitive strengths. Our ambition is to build the most reputable brand in our sector through a relevant and distinctive identity, demonstrating leadership and purpose, and more efficient amplification to our core audiences.
Our reputation metrics remained strong during the first half. We achieved a Net Promoter Score (NPS) of 56 (2025: 63), which has stayed in the “great” 50-70 range. The NPS survey was expanded to include a much broader set of clients, providing a more representative measure of client feedback and engagement. Our reputation impact score remained above 60 ("good") and our share of voice across wealth management more than doubled to 23% across all media. This positioned Rathbones as the number one Wealth Management and Asset Management brand by share of voice in tier one media during the second quarter. Rathbones also remained the most cited wealth manager website across tracked large language model prompts, while engagement across our digital channels continued to grow. Employee advocacy also continued to strengthen, significantly extending the reach of the Rathbones brand.
Looking ahead
When we talk about becoming the best wealth manager in the UK, by far, we are intending to build a business that delivers better outcomes for clients, creates greater opportunities for talented colleagues, operates more effectively and earns its reputation through the quality of its performance, advice, personal service and client relationships.
The work currently underway in relation to the FCA review is demanding, but it is the right work. Strengthening governance, improving processes and simplifying the organisation will leave Rathbones a stronger business than before. Combined with the strategic initiatives already underway, it will create a more scalable business that is better positioned for long-term growth.
Above all, what gives me confidence is the continued trust our clients place in Rathbones. Their support through a demanding period reflects the strength of our relationships, the quality of our advice and the professionalism of our colleagues. It is the strongest endorsement of our strategy we could receive.
We have a clear strategy, a strengthened leadership team and improving momentum across the business. I am confident Rathbones will emerge from this period a stronger company, better equipped to serve clients, support colleagues and create long-term value for our shareholders.
