PIMFA
Industry Statistics
At PIMFA we cover the Financial Advice and Wealth Management arena in the UK. This community of financial expertise in the UK is forever changing and the research we produce and the data we collate will represent this, we want to inform and educate you as to the current trends and to the more traditional facets of advising on and managing assets. This section will give a brief overview, and the members section will give greater detail, on how this world is changing and how you can adapt or focus your best efforts in a timely and efficient manner to take advantage of opportunities that arise.
The Financial Adviser Market:
The seventh in PIMFA’s series of annual reports on “The Financial Adviser Market: In Numbers”, describing the size and nature of the advice sector, shows a vibrant industry coping well against a backdrop of increased regulation and market volatility.
Conservative estimates of AUM for the Financial Advice and Wealth Management sectors stand at approximately £272Bn and £942Bn respectively. Whilst the slight contraction in the overall number of firms continues, there has been an increase in the number of advisers per firm – up to just under 5, showing an improvement in client service. Revenue is up by a significant 14% on 2017, pre-tax profits jumped by 25% to £872 M, the most significant rise since 2010, and retained profits are up by over £70 M to £303 M, with overall sector margins averaging 17%.
As to industry sentiment, whilst many consider the current regulatory burden as excessive, there is a feeling that regulators should “get more involved in the industry”, particularly where this relates to the continual and unacceptable increases in the FSCS levy, enforcement action against those who cause reputational damage to the industry and that regulation should be tailored for smaller firms too.
Overall, there is a desire to serve clients better through the removal of excessive administration, plus a streamlining of regulatory and compliance requirements, which PIMFA expects to take shape over the coming months as we prepare for our departure from the EU.
The following excerpt is partly taken from ComPeer’s Q4 2022 update of the UK Wealth Management Industry report
As 2022 drew to an close, there was some encouragement for the UK Wealth Management Industry as markets started to recover, allowing for some growth in asset values. The 2% rise in the final quarter stopped the run of three consecutive quarters of asset value reductions. However, most will finish the year down from where they were at the start, with assets on average falling by just under 9% quarter on quarter.
In most years, asset reductions would have a significant negative impact on revenue generation, given the reliance on investment management fees. However, this industry always seems to find a way to continue the upward flow of income. In 2022, firms can be thankful for the rise in interest rates, as net interest income alone has driven up total revenue. Across the whole year, this revenue stream has more than doubled (up 132%), and in the final quarter was the largest revenue stream for XO Stockbrokers – taking it ahead of custody fees and far beyond commissions.
This has resulted in good increases in profit margins for the XO stockbrokers, with these bouncing back to 2020 levels. Whilst for Wealth Managers, profit margins have stabilised as a result, stemming fears of large reductions in profitability as costs continue to rise at a fast rate.
On the whole therefore, the results are more positive than many will have expected given the turbulence and uncertainty this industry has faced throughout 2022.
Key Statistics on the UK Wealth Management and Financial Adviser Market
Wealth Management Q4 2022 | Current Quarter | Previous Quarter | % Change | Same Quarter in Previous Years | % Change |
Investment Assets (£billion) | 1,254 | 1,229 | 2.1% | 1,376 | -8.9% |
Client Trades* (000s) | 8,219 | 8,826 | -6.1% | 11,154 | -25.7% |
Retail Market Bargains (000s) | 3,619 | 4,053 | -10.7% | 4,700 | -23.0% |
Total Revenues (£million) | 2,585 | 2,387 | 8.3% | 2,226 | 16.2% |
FTSE UK Private Investor Balanced | 4,822 | 4,747 | 1.6% | 5,221 | -7.6% |
Financial Adviser (FAMIN Report 2021-2022) | December
| Previous Year (2019) | % | Notes | |
Latest No of Financial Adviser Firms | 14,065 | 13,779 | 2.05% | Not a big change here | |
Consolidated Revenue (for all Regulated business) | £5,130m | £4,242m | 18.9% | A revenue increase for firms | |
Pre-Tax Profits | £728m | £808m | -10.4% | A decrease to in the last year | |
Retained Earnings | £186m | £204m | -9.23% | ||
Pre-Tax Margins | £728m | £808m | -9% | This represents a second successive decline in pre-tax profits, thought still slightly higher than seen in 2016 and 2017. |
* participating firms only
[1] Investment Assets and Revenue are for the total market, based on extrapolated quarterly survey participant data. Participants account for over 60% of total market assets and 65% of total market revenue. Client trades represent participating firms only. Retail market bargains are for UK Retail Stockbrokers.
With thanks to ComPeer limited: www.compeer.co.uk
