Record AUM and strong customer growth for investment platform AJ Bell

Customer numbers rose and assets under administration reached record levels in the first quarter period, said Manchester-based investment platform, AJ Bell today.

During the three months ended December 31, 2023, the group welcomed 8,000 more customers to its Platform business, closing the quarter at 484,000, up 12% in the last year and two per cent in the quarter.

Total advised customers of 161,000 showed an eight per cent increase in the last year and one per cent in the quarter, while total D2C customers of 323,000 was up 13% in the last year and two per cent in the quarter.

Record assets under administration (AUA) of £76.2bn represented a 15% increase in the last year and seven per cent in the quarter, while the group reported a significant year-on-year increase in gross and net inflows across the platform.

Gross inflows in the quarter of £2.7bn were compared with £1.9bn in 2023, while net inflows in the quarter of £1.3bn were up on the £0.8bn mark previously.

The AJ Bell Investments business achieved assets under management of £5.2bn, up 53% in the last year and 11% in the quarter.

Net inflows in the quarter of £0.4bn were in line with the prior year.

Chief executive, Michael Summersgill, said it was an “excellent” start to the financial year, with first quarter net inflows across the platform being higher than in any individual quarter of FY23.

He said: “Together with favourable market movements, platform assets under administration increased by seven per cent to reach a record £76.2bn.

“Some of the macroeconomic headwinds experienced throughout 2023 showed signs of improving in the quarter, driving global equity markets higher and easing some of the pressure on household finances.

“Platform net inflows of £1.3bn in the quarter were up 63% on the £0.8bn reported in the prior year, reflecting increased confidence among retail investors compared to a year ago.”

He added: “AJ Bell Investments continues to perform strongly with AUM up 11% in the quarter through a combination of strong net inflows and positive market movements, surpassing £5bn for the first time. The consistently strong growth of our investment business illustrates the attractiveness of our low cost, simple products.

“As we look ahead, our platform will continue to appeal to both current and potential customers and advisers.

“We continue to invest in enhancing our propositions, with a strong focus on ease of use, whilst also investing in our pricing to ensure we continue to deliver great value to customers.”

Last month the Financial Conduct Authority (FCA) raised concerns regarding interest and fees charged on accounts by some firms.

Mr Summersgill said today: “Following the FCA’s recent clarification of its expectations concerning interest paid on cash balances held on investment platforms, we announced changes to the interest rates paid on cash balances whilst also lowering a number of our charges.

“These changes will benefit our customers to the tune of £14m a year, reflecting our longstanding philosophy of sharing our economies of scale as we grow – an approach that is very much aligned with the Consumer Duty.

“Our dual channel model has proven its resilience during a period of high inflation over the last 18 months, delivering consistent customer growth and net inflows.

“Whilst this strong start to the year provides good momentum as we head into the busy tax year end period, we remain focused on the long term growth opportunity that exists in the platform market and the investments that we are making into our propositions and pricing will further strengthen our long term competitive position.”

Rae Maile and Ross Luckman, analysts with investment bank Panmure Gordon, reiterated their ‘Buy’ advice on AJ Bell after today’s update.

They said: “After a number of statements from the sector where strong markets offset weak flows, AJ Bell has enjoyed the benefit of both those strong markets but also strong flows.

“Platform net flows of +£1.3bn were well ahead of our +£0.7bn estimate and the strongest quarter since Q3/22.

“Customers numbers grew again, to new records, underpinning future growth expectations.

“The benefit of markets may already have abated, but the customer and funds growth remains and our estimates increase, again, by around five per cent on a FY basis. The shares trade at a PER of 16x for the year to 9/24E and 15x to 9/25E, easily justified by the strength of delivery and the anticipation of more to come.”