AJ BELL PLC Interim results
For the six months ended
31 March 2024
Issued on 23 May 2024
Agenda
Title | Page | |
Business update | 3 |
Financial update | 14 |
Outlook | 20 |
Appendices | 24 |
Glossary | 28 | |
AJ Bell | Interim results for the six months ended 31 March 2024 | 2 |
Business update
HY24 key messages
Our dual-channel platform continued to deliver strong organic growth with platform customers surpassing half a million and net inflows up 45% to £2.9 billion
Our focus on keeping our charges low, combined with high service standards and easy to use products, puts us in a very strong position to gain further market share
We continue to invest to support our long- term growth ambitions - AJ Bell's brand awareness has improved, and our Ready- made pension has launched
Very strong financial performance, with first half revenue and PBT up significantly, supporting a 21% increase in interim dividend to 4.25 pence per share
AJ Bell | Interim results for the six months ended 31 March 2024 | 4 |
Key investment highlights
An update on the seven pillars of the AJ Bell investment case
Key investment highlight
Our market
Pages 6-7
Our propositions
Pages 8-9
Our customers
Pages 10-13
Our people
Our business model
Quality of earnings
Pages 15-17
Cash generation
Pages 18-19
HY24 update
- Strong growth drivers for both the advised and D2C markets - we continue to take market share in both
- Consumer Duty strongly embedded in our business - our compelling customer value proposition means we are well positioned
- Continued investment in our brand and propositions, in line with our plans set out at the start of the year
- Ready-madepension launched, making it even easier for customers to consolidate their existing pensions with AJ Bell
- Continued growth - we surpassed half a million platform customers in HY24, up from just under 200,000 when we listed in 2018
- Charges lowered for our customers - significant pricing reductions and interest rate increases introduced on 1 April
- Named in the top 20 large companies to work for in the UK by Best Companies, our sixth consecutive year as a three-star company
- Fiona Fry and Julie Chakraverty appointed as a new Non-executive Directors - enlarged Board structure now finalised
- Our dual-channel platform delivered another period of strong organic growth across both the advised and D2C markets
- Single operating model ensures efficiency in serving both markets and provides margin improvement opportunities
- The strength of our diversified revenue model has once again been demonstrated in HY24
- Improved retail investor sentiment and strong equity markets helped to drive custody fees and transactional fees higher
- Cash generated from operations of £58 million in HY24, with cash balances of £162 million at the period end
- Supports continued investment in strategic initiatives alongside a 21% increase in interim dividend to 4.25 pence
AJ Bell | Interim results for the six months ended 31 March 2024 | 5 |
Our market
A significant long-term growth opportunity for the platform market
A large addressable marketDual-channel model maximises our growth opportunity
Platform net inflows vs peers(3) | Advised |
D2C |
~£3tn
Total addressable market(1)
~£1tn
Platform market AUA(2)
£80.3bn
AJ Bell
platform AUA
Figure 1
- Total addressable market estimated to be worth at least £3 trillion
- We have an 8% share of the overall platform market
- Significant opportunity for continued market growth:
- ~£2 trillion of addressable assets held off-platform
Cash savings
£2.9bn 4% | % of opening AUA | ||||
1.2bn | £2.0bn | 1% | (£0.2bn) 0% | ||
£0.7bn | £1.1bn | 2% | £0.9bn 2% | ||
£1.7bn | £1.7bn | ||||
£1.3bn | |||||
1.1bn | 0.9bn | ||||
(£1.9bn) | ||||
March 2024 | March 2024 | March 2024 | March 2024 | Dec 2023 |
6 months ended | Figure 2 |
The platform market benefits from long-term structural growth drivers
Society & demographics | Government legislation | Technology |
An ageing UK population that is working and living for | Shift towards defined contribution pension schemes | Ease of accessing investments has made investing |
longer, with the need for individuals to take greater | boosted by automatic enrolment, with increased flexibility | accessible to a far broader range of people |
personal responsibility for their long-term savings | as a result of pension freedoms |
(1) | Source: Liberum | AJ Bell | Interim results for the six months ended 31 March 2024 | 6 |
(2) | Sources: Lang cat - £575bn Advised market AUA at 31 December 2023; Boring Money - £392bn D2C market AUA at 31 December 2023 | ||
(3) | Source: Company financial reports and market announcements | ||
Our market
Key emerging themes in the UK platform market
Health of the UK capital markets
- Challenges well documented - positive that this is on the political agenda
- Plans announced in March 2024 Budget statement for a new 'UK ISA' aimed at reviving the London stock market
- Aims are laudable, but we do not believe the proposed UK ISA is the right solution:
- Niche product - attractive to only the minority who fully utilise their £20,000 annual ISA allowance
- Negligible impact - small additional investment each year spread across shares, bonds and gilts. Immaterial in the context of the UK markets
- Damaging complexity - creates additional complexity in the ISA market, which risks deterring would-be investors from engaging with ISAs altogether
- We believe the Government should instead:
- Simplify the existing ISA system into a single 'One ISA' product to attract more retail investors
- Remove the 0.5% stamp duty levied on most UK shares to improve the attractiveness of UK equities versus many overseas markets, where no equivalent tax is payable
Advice / guidance boundary review consultation
- There is a significant advice gap in the UK, with many people who would benefit from financial advice being unable to access it
- We are working with the Treasury and the FCA on their joint review of the advice / guidance boundary
- Proposed 'Targeted Support' regime has the potential to be a positive step forward in enabling good customer outcomes
- There is significant potential for D2C platforms to provide a far greater level of guidance and support to retail investors who currently fall into the advice gap
- We continue to monitor developments closely and consider how we could deliver better outcomes to customers under this potential new regime
AJ Bell | Interim results for the six months ended 31 March 2024 | 7 |
Our platform propositions
An easy-to-use platform underpinned by great service
Advised | D2C | |
(moving to full beta in H2) | ||
- Reduced customer charges and increased interest rates paid on cash balances from 1 April
- New client onboarding journey launched, delivering an improved interface mapped to the advice process which streamlines new business procedures
- Launched the AJ Bell Money Market MPS with an OCF of just 10bps to support advisers serving customers looking for cash-like returns
- Reduced customer charges and increased interest rates paid on cash balances from 1 April
- New Ready-made pension launched to help customers to easily consolidate their existing pensions and invest automatically via a low-cost investment solution managed by AJ Bell
- Improved AJ Bell brand awareness following the investment made in this area, supporting strong new business
- Platform is underpinned by the market-leading service levels provided to customers and advisers. In HY24 we have:
- Executed over 2 million trades, settled over 4 million transactions and made tens of thousands of pension payments, evidencing the scalability of our platform
- Answered over 200,000 phone calls, with 94% of all calls answered within 20 seconds during March, one of our busiest months ever
8
AJ Bell | Interim results for the six months ended 31 March 2024 | 8 |
Our platform propositions - AJ Bell Investments
Our investment solutions are an increasingly important part of AJ Bell's offering
£0.8 billion of net inflows in HY24 drove AUM up 23% to £5.8 billion
Strong momentum in advised channel
Figure 3
AJ Bell Investments AUM penetration
(% of AUA)
5.2% | 5.6% | 5.2% | 5.7% | 6.0% | 5.6% | |||
4.1% | 4.4% | 4.4% | ||||||
3.6% | 3.8% | |||||||
3.0% | ||||||||
2.8% | ||||||||
1.9% | ||||||||
HY21 | FY21 | HY22 | FY22 | HY23 | FY23 | HY24 | ||
Advised | D2C |
Long-term performance driving wider recognition
- Strong long-term performance - all AJ Bell funds outperformed their sector benchmark over 3 and 5 years to 31 March 2024
- Financial adviser community increasingly attracted to our investment solutions, driving strong flows via both AJ Bell Investcentre and third-party adviser platforms
- The AJ Bell Balanced Fund was the winner in the Best Balanced Fund category at the Professional Adviser Awards 2024
AJ Bell | Interim results for the six months ended 31 March 2024 | 9 |
Our customers
Advised customer insights
Growth - six months ended 31 March 2024
Customers
+4% in HY24 to 165,000
AUA
Total AUA +11% in HY24 to £53.4bn
Net inflows of £1.2 billion (HY23: £1.1 billion)
Customer profile
Average age of 56
Average portfolio of (HY23: £308k)
Retention rate of 93.3% (HY23: 94.9%)
Gross inflows from new and existing customers
Figure 4 | HY24 | HY23 | ||
Gross inflows | Gross inflows | |||
£3.2bn | £2.6bn | |||
£1.2bn | £0.9bn | |||
£2.0bn | 37% | 35% | ||
£1.7bn |
63% | 65% |
Average inflows per | £167k | £144k |
new customer | ||
Average inflows per | £8k | £6k |
existing customer | ||
- Increased inflows from new customers supported by an uptick in migration activity as advisers were more willing to transfer cohorts of clients than in HY23
- Strong market performance and increased adviser confidence resulted in higher average inflows from both new and existing customers
AJ Bell | Interim results for the six months ended 31 March 2024 | 10 |
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Disclaimer
AJ Bell plc published this content on 23 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 May 2024 06:10:53 UTC.
