AJ Bell's pre-tax profits decreased to £26.1m in the six-month period ended 31 March 2022, as compared to £31.6m in HY21, according to its interim results.

The decrease in pre-tax profits was due to the lower revenue margin earned on assets coupled with increased investment in its brand, technology and propositions to support its long-term growth strategy, it said.

It reported net inflows of £2.8 bn and assets under administration (AUA) closing at £74.1bn, achieved against "a very different market backdrop to that seen in the prior year with adverse market movements of £1.5bn since the year-end".

Its revenue margin on AUA was lower than the comparative period as a result of the "normalisation of dealing activity and lower interest rates earned on customer assets," it said, and is expected to increase in the second half of the year from the higher interest rate environment.

Its retail customers grew by 35,555 during the period to 418,309, with its retention rate increasing to 95.4%, the business said, adding that its advised customers grew by 8% and its D2C customers by 10% in the period.

The business's revenue grew to £75.5m, as compared to £73.9m in the HY21. It expects its pre-tax profit margins to increase by 35% for FY22 with a further improvement anticipated in the following year, it said.

CEO commentary

CEO Andy Bell said: "I'm pleased to announce another solid set of results for the first half of the year. Our dual-channel platform continues to attract and retain long-term customers in both the advised and direct-to-consumer markets, with our platform retention rate of 95.4% evidencing the quality of our propositions and our high customer service levels.

"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."

He added: "The long-term structural drivers of growth in the UK investment platform market remain strong with around two-thirds of our estimated £3trn target market not yet on a platform. We continue to see customers moving onto investment platforms to benefit from increased flexibility and lower costs and we are well-positioned to attract an increasing market share with our leading propositions and established brand in both the advised and direct-to-consumer segments.

"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."

Reduced charges

AJ Bell has reduced a number of charges on its investment platform for financial advisers, AJ Bell Investcentre with effect from 10 June.

Cash transfers-in to a SIPP will be free of charge, from its current rate of £60 plus value-added tax (VAT), it said. The SIPP setup charge will be removed for accounts opened online, as compared to its current rate of £120 plus VAT.

The dealing charge for proportionate disinvestments across portfolios in the Funds & Shares Service will also be removed, which is currently £1 per holding disinvested.