Following a few turbulent years mired by losses and leadership issues, the ASX-listed wealth group Clime Investment Management (ASX: CIW) could be worth keeping on radar following early signs that robust plans by managing director Michael Baragwanath to turn the ship around are starting to bear fruit.
While earnings have declined by 55.5% per year over the past 5 years – with large one-off items impacting financial results – efforts to reposition to company as a true multi-asset, client-focused manager of scale appear to be rekindling investor interest in the stock.
FY25 saw the fund manager deliver a net profit after tax of $510,676 following a massive loss of $3.8 million in FY24.
Driven by the private wealth and corporate advisory unit, gross revenue of $13.4 million grew from $11.8 million year on year.
Funds under management, advice and mandates have grown to $1.7 billion by offering individually managed accounts, managed funds and separately managed accounts.
Early stage restructure
While much of the turnaround can be attributed to offloading Madison Financial Group last June to Infocus, this was also accompanied by a broad restructure, which delivered over $2 million in annual savings from executive costs, third-party service reductions, and IT renegotiations.
However, Baragwanath recently reminded the market that he is still in the early stages of transitioning Clime "into an interesting, fast, growing and amazing business".
Within its annual report that heralded the FY25 result, Baragwanath outlined a range of initiatives that have and will be undertaken by the company in FY26.
In addition to its core funds management heritage – and $1.7 billion under advice - the company also plans to draw upon its uniquely recognised branding, especially at a time when many competitors are struggling for recognition.
“The success we have seen throughout FY25 underpins our confidence to pursue direct marketing and distribution opportunities with greater vigour in FY26,” he noted.
Expanded offering
Underpinning Baragwanath’s growth strategy are plans to expand the breadth of its funds and advice offerings to advised, direct and third-party clients.
This includes broadening the asset classes currently covered, deepening its private wealth and corporate advisory capabilities, and introducing bundled multi-asset investment solutions that draw on its equity, credit and income expertise.
“We are also enhancing scale and client experience through investment in technology — from Clever.Clime.com.au for self-directed investors, to product transparency systems that raise standards across the industry,” said Baragwanath.
“Coupled with newly established CBD offices in Sydney and Melbourne, CIW is now better positioned to serve clients nationally.”
Operating margin growth
While the company remains a high fixed-cost business, Baragwanath aims to lift operating margins toward 20% in FY26, with a medium-term target of 30% in FY27.
He also expects continued growth in advice, funds management and corporate fees to continue driving revenue growth well ahead of expenses.
Initially hired as a consultant in December 2023, Baragwanath was named acting managing director after Annick Donat stepped down from her CEO role in July 2024.
After taking over the wheelhouse, Baragwanath proceeded to offload Madison Financial Group, having concluded that it would take too much time and money to turn the loss-maker around.
Value-add
What Baragwanath is also prioritising is the rationalisation of products and expansion into areas where Clime can deliver value.
"What we had was a hodgepodge of acquisitions. We're basically streamlining that now by making sure we've got the right partners that we're working with and working to improve their performance at the same time, so that's closing some products and reshaping others."
For example, lowering costs and changing some of its investments saw the income fund boost its performance between 20% to 30%.
"I think we can do something similar in the equity space as well. So, we're working through that pretty aggressively to make sure we've got the best products we can deliver at the best price we can," he said.
"What I'm focused on is packaging and understanding where every dollar is invested. What we can do that others can't easily is package, meaning we can link multi-asset funds with our strategies to our advice."
Rather than following the industry’s 'clip the ticket' to fees, Baragwanath has a target cost he wants to layer and rebate and subsidise areas in order to get that price target for our clients.
Sharing the love
In an attempt to turbocharge Clime's culture, last financial year saw Baragwanath divide the $200,000 the board awarded him in short-term incentives (STIs) in the last financial year with all his staff.
It's an investment in the company. How do I get the fastest change, the best culture, and the best outcome that will pay dividends for years? That's investing in the people that are making the business happen," Baragwanath said.
"Clime's businesses rely on the frontline staff to be good. If they're not motivated, believe in the business and happy, then it doesn't matter what you do around products and discounts and marketing.”
For the uninitiated, Clime's private wealth businesses are Clime Private Wealth, MTIS Wealth Management and Investment Strategists Accounting Services, while Infocus is licencing Clime Private Wealth via a dealer-to-dealer arrangement.
Climes' efforts to reconnect with clients via TikTok, YouTube and Instagram appear to be working, with the TikTok channel alone having clocked 394,000 views in FY25.
"More important than metrics, clients are telling us they feel 'reconnected with Clime.' That reconnection - with our purpose, people, and investment philosophy - is vital,” he said.
“We are more than a fund manager; we are a partner clients can trust through every stage of wealth creation.”
Clime Investment Management has a market cap of 31 million; the share price is up 25% in one year and up 3.75% in the last week.
