AJ Bell drops platform costs as profits fall

Profit before tax at investment platform AJ Bell fell to £26.1m (HY21: £31.6m) a for the six months ending 31 March.

AJ Bell attributed the fall in profit to a drop in retail investor engagement and dealing activity, which was ‘exceptionally high’ last year.

The platform saw adviser net inflows of £1.5bn for the period, partially offset by £0.8bn of adverse market movements.

Advised assets under administration at the end of the half were £46.5bn (FY21: £45.8bn).

Alongside the trading update, AJ Bell said that it would remove or reduce a number of charges for advised clients.

The platform will remove its charges for cash transfers-in to a SIPP (currently £60 +VAT), the SIPP setup charge for accounts opened online (currently £120 + VAT), and the dealing charge for proportionate disinvestments across portfolios in the Funds & Shares Service (currently £1 per holding disinvested).

These charges will be removed from 10 June.

The platform custody charge will also be removed for cash holdings in the Funds & Shares Service from 1 July.

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Billy Mackay, managing director of AJ Bell Investcentre, said: “As the business grows we are always looking for ways to share economies of scale with advisers and their clients and at a time when so many people are dealing with the impact of the rising cost of living, now felt the ideal time to make our latest round of charge removals and reductions.

“These changes will enable financial advisers to offer their clients even greater value via our platform and reinforce our position as one of the most competitive platforms in the advised market.”

Net inflows across all channels for AJ Bell in the six months ending 31 March were £2.8bn and assets under administration closed at £74.1bn.

The platform saw an 8% rise in advised customer numbers to 137,201, and a 10% rise in direct customers over the half.

Total retail customer numbers rose by 35,555 to 418,309.

Group revenue rose slightly to £75.5m (HY21: £73.9m).

The platforms customer retention rate also rose slightly to 95.4% (FY21: 95%).

Andy Bell, CEO at AJ Bell, said he expects the profits to improve for the platform in the second half of the year.

He said: “The impact of normalised customer dealing activity and lower interest rates compared to the same period last year resulted in a lower revenue margin in this period. However, our diversified revenue model positions us well across all market conditions and we are now seeing the positive impact of recent interest rate rises on our revenue margins.

“Whilst market uncertainty is likely to persist in the short-term, our business model ensures we can continue to invest in our customer propositions whilst delivering strong financial performance and we expect profit before tax for the full year to be at least in line with consensus market expectations.”

Assets under management by AJ Bell Investments, the platform’s investment solutions, rose to £2.3bn (FY21: £2.2bn).

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AJ Bell drops platform costs as profits fall