AJ Bell reports asset and client growth in 2020 despite Covid-19

Investment platform AJ Bell posted a year-end trading update this morning covering the period to the 30th of September 2020 and they were very encouraging customers number grew by +27% over the year to 295,305 and Assets Under Administration or AUA rose to £56.50 billion.

There was also growth at AJ Bell’s advisory business where client numbers rose by +11% or 10,855 to 108,911 whilst the direct to consumer business saw an increase in customer numbers of just 52,000 which represents growth of 43% on an annual basis.

Assets within the advisory business grew by +11.0% to £2.0 billion mirroring the growth in client numbers that may just be coincidental but if not it does raise a question or two about investment performance though as AJ Bell pointed out in the trading update the FTSE all share fell by -19% during their financial year.

Chief Executive Andy Bell  said of the update 

“We are pleased to report another year of strong growth in customers and assets under administration, delivered against a continuing backdrop of extreme market volatility and significant disruption to people’s lives caused by COVID-19. “

And that 

“Our focus on the needs of our customers and our easy-to-use platform has fuelled a 29% increase in platform customers, with particularly strong progress made in the direct-to-consumer market. Inflows also rose markedly, resulting in a robust increase in assets under administration despite heavy falls on the UK stock market”

AJ Bell’s stock which trades under the ticker AJB were largely unmoved on the news though over the last 6-months the shares have rallied by more than 35% from lows of 292p to stand at 404.25p as I type. The 3-month high is up at  463p and was posted on the 29th of September AJ bells shares have fallen 12% from that near term peak with almost half of that drop coming over the last week and that mirrors a very similar performance in the price action of larger rivals Hargreaves Lansdown.

AJ Bell’s current market cap is £1.66 billion so it’s very much a mid-size business among wealth management and investment platforms.  An industry where it’s probably best to be either a niche player or significantly larger than the current size of the company. 

Organic growth may not be enough to take the business to next level, particularly when the investment landscape is changing rapidly and subject to so much disruption and competition from fintech platforms. 

On that basis, AJ Bell may need to bulk up through acquisition(s) or partner up with a larger  organisation. The company will report full-year numbers on December 3rd. 

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