Wealth managers had a subdued 2011 second quarter, which saw trade volume falling sharply (down 24.4%) and this was reflected in the sharp decline in the profitability of the wealth managers.
According to ComPeer UK Wealth Management, asset values rose marginally in the wealth management sector to GBP490 billion but this was reflected due to small rise in the market (FTSE APCIMS Balanced Index increased by 0.7%).
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The trading scenario has direct affect on commission income for both Execution Only Stockbrokers and Wealth Managers, which fell sharply.
The Execution Only Stockbrokers reliance on commission fees is less as they receive regular, fixed fee income (in the form of custody and administration fees). These fees accounted for 27% of all Execution Only revenue, the report says.
Combining the rise in fees with a reduction in costs has resulted in pre-tax profit margin increasing for these firms to 36.8%.
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