Customer numbers continue to rise at investment platform AJ Bell

Manchester investment platform, AJ Bell, said customer numbers have continued to increase, in a fourth quarter trading update for the three months to June 30, today.

In its platform business customer numbers increased by 14,120 in the quarter to close at 417,503, up 18% in the past year and four per cent in the quarter, which represents strong ongoing organic growth in what is an uncertain economic environment.

Total advised customers of 141,856, were up 16% in the last year and three per cent in the quarter.

Total D2C customers of 275,647, were up 20% in the last year and four per cent in the quarter

Assets under administration (AUA) closed at £63.5bn, marginally up over the last year and down five per cent in the quarter, primarily due to adverse market movements. During the quarter the FTSE All-Share Index fell by six per cent while the MSCI World Index (GBP) fell by nine per cent.

Net inflows were in line with those for Q2 across both the advised and D2C channels, although weaker investor sentiment in Q3 relative to the comparative quarter in 2021 led to a year-on-year decline.

There were gross inflows in the quarter of £2.6bn (2021: £3.2bn). Net inflows in the quarter were £1.6bn (2021: £2.1bn).

Dodl by AJ Bell was launched successfully in April.

For AJ Bell Investments, assets under management (AUM) closed at £2.5bn, up 25% over the last year and up nine per cent in the quarter.

Net inflows in the quarter were £271m, in line with the underlying net inflows reported in the comparative quarter last year.

In the non-platform business, customer numbers remained broadly flat, closing at 14,947.

Net outflows in the quarter were £1.7bn (2021: £0.3bn), which reflected what was the final outflow of £1.7bn in relation to the previously announced closure of AJ Bell’s institutional stockbroking business

As set out in previous guidance, the closure of the low margin institutional stockbroking business will not have a material impact on AJ Bell’s financial performance.

Chief executive, Andy Bell, said: “Our trusted, dual-channel investment platform has continued to attract thousands of new customers looking to invest for their future, despite a weakening in investor sentiment over the last six months.

“During our third quarter, platform customer numbers continued on an upward trajectory and closed 18% higher than in the previous year, whilst platform net inflows of £1.6bn were in line with Q2, a traditionally strong quarter which benefits from the increase in customer activity in the run up to tax year end.

“The advised market has remained resilient in the face of current market headwinds and the strength of our proposition helped to deliver net inflows of £0.9bn. We have recently reduced several charges on our advised platform, AJ Bell Investcentre, utilising our scale to further increase the value that advisers can offer to their clients.

“The phased launch of Touch by AJ Bell starting later in 2022 will further expand our offering for advisers, helping them to cater for clients looking for a digital service model.”

He added: “Our D2C platform delivered net inflows of £0.7bn during the quarter, predominantly via our fast-growing AJ Bell Youinvest proposition. We have continued to enhance the value of that proposition for our customers, by making it easier to use and reducing our charges.

“During the quarter we also launched Dodl by AJ Bell, our new low-cost, commission-free investing app aimed at less experienced investors. We continue to develop this new proposition, with the ability to transfer-in from other providers soon to be launched and the addition of US shares to follow.

“Our investments business is delivering on its commitment to offer a wide choice of investment solutions at low cost and with clear communications. Our investment solutions have outperformed against most competing products over the last five years, which is why they are valued by financial advisers, their clients and our retail customers. Net inflows of £271m in the quarter equated to a healthy 12% of opening AUM, with total AUM hitting £2.5bn.”

He said: “Overall, our business continues to perform well and our long term growth prospects remain strong.

“The continued development of our customer propositions, together with our highly competitive pricing and strong customer service, means we are well positioned to continue growing the business and increasing our market share.”

Phil Dobbin and Rae Maile, analysts at Panmure Gordon, rate AJ Bell shares as a ‘buy’ after today’s update. They said: “The company has continued to see good growth through the most recent quarter, with client growth and net flows ahead of our estimates.

“The impact from markets was worse than we had anticipated, but with higher interest rates on higher client cash balances our estimates are essentially unchanged at this stage, remain well underpinned, and will have scope for upgrades as and when markets recover.

“The share price has suffered with markets and with the sector, and has been derated too with the forward PER now some 10 points lower than a year ago. With the company delivering the operational performance which seems to be eluding others in the sector, the shares are a Buy.”