The first signs of recovery for Wealth Managers, whilst Execution Only Stockbrokers continue to thrive

The second quarter has shown the first indications of a recovery within the markets, represented by good performances from both wealth managers and execution only stockbrokers.

A 9.5% rise in the FTSE All Share and a record number of XO new accounts (240,376) have contributed to the value of assets administered by execution only stockbrokers increasing by a substantial 20.2%. Trade activity has also been exceptional, most particularly through the cash markets where volumes for all UK Retail Stockbrokers increased by 15.6% quarter on quarter, making Q2 the most active quarter since Q1 2000 with over 5 million cash market trades. Execution only stockbrokers in particular have thrived, as shown by a 9.1% growth in revenues and pre-tax profit margins improving to beyond 30%.

Encouragingly for wealth managers, investment assets increased by 1.0%, following five consecutive quarters of asset decline, whilst investment management fees grew by 3.7%. However, treasury income declined quarter on quarter by 7.4% with the base rate remaining at 0.5%, resulting in total revenue reduction of 0.5%. In the same period staff numbers fell by 1.8%, contributing to a 2.8% reduction in total costs. Therefore despite the decrease in revenue, pre-tax profit margins improved, rising from 20.0% to 21.9%.