© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
July 27, 2009 7:23 pm
In its UK Wealth Management Industry Report 2009, the research firm also reports a 12 per cent annual increase in the number of ‘execution-only’ (no-advice) investment accounts to about 3m – the highest in the past decade.
“This (growth in no-advice accounts) is mainly about the move to financial DIY,” said Compeer senior analyst James Brown, adding that lower dealing commissions and improved internet access have fuelled the trend.
He said that for wealth management firms without an execution-only service, the last year had been an “opportunity missed”, as no-advice firms registered a 134 per cent jump in spread bet trades and a 17 per cent increase in fund trades.
The proportion of execution-only trades that were online – rather than by telephone or post – also rose above 80 per cent for the first time this year.
The strongest growth in spread-betting and contract for difference (CFD) volumes was in 2008, a year of heavy market falls and unprecedented volatility. But Compeer also reports that spread-bet volumes were 60 per cent higher year-on-year in the first quarter of 2009, while CFD volumes showed 12 per cent annual growth over the same period.
At the end of 2008, wealth managers in the UK controlled £335bn of investment assets, generating £4.04bn of revenue and £998bn of pre-tax profits over the year. Assets under management fell nearly 17 per cent, against a 33 per cent drop in the FTSE All Share index, and net investment inflows were down on the previous year.
Interest earned on portfolio cash showed further growth as a revenue source in 2008, but is expected to come under pressure following the base rate falling to a 0.5 per cent low. Execution-only firms earned just under a third of their revenues from interest last year – a rising trend that has seen no-advice brokers become progressively less reliant on commissions.
One future growth opportunity for the wealth management industry is in pensions, says Compeer, given the continued decline in defined benefit schemes.
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.