Since 2020, there has been an upsurge in the number of retail investors. With three combining factors - extra cash sitting in savings during the pandemic, more time to research investing, along with the abundance of accessible investment platforms - this has led to retail investors accounting for 52% of global assets under management in 2021. That figure is expected to grow to over 61% by 2030.
Among the UK investment platform offerings is PensionBee (PBEE), a pension management app that combines all your current and old pension providers into one place. This week, Pension Bee released their annual trading update, showing strong figures for 2022. Invested customers increased 56% to 183,000, up from 117,000 in 2021. Assets under Administration increased by 17% year on year to over £3.0bn (up 15% from 2021) driven by strong inflows from new and existing customers. In addition, the customer retention rate remained high at 97%, helping it to a strong revenue increase of 38%, to £18m.
Following suit, AJ Bell (AJB) reported a glowing trading update for the final quarter of the year for their platform business. Customer numbers increased by 8,713 in the quarter to close at 434,365, up 13% in the last year and 2% in the quarter. Assets under administration closed at £66.3 billion, down 3% over the last year but up 3% in the quarter.
Hargreaves Lansdown (HL.) remains the top hitter among investment platforms for private investors in the UK, and earlier in the year reported client growth of 90,000 (from April 2021 to April 2022) with a client retention rate of 92.4% over the same time frame.
Another key player offering services targeting retail investors in the UK is Fintel (FNTL), a leading fintech company and support services business, predominately to the financial intermediary industry. In September, Fintel reported total revenue growth up 2% to £32.2m for the first half of 2022 and is confident in meeting full-year expectations for 2022.
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Many investment platforms have enjoyed stellar success over the year, reflected strongly in both Pension Bee and AJ Bell’s recent trading updates. This is promising to see after the immense financial challenges posed to the stock market in 2022 and demonstrates that retail investors' faith in investment platforms and the stock market alike continue to persist.
Though private investors may still have concerns about the economic climate, this bodes well moving into 2023 - inflation rates are expected to have reached their peak in 2022 and some forecasters suggest that the economy could begin to recover in 2023.
What’s more, retail investors only have to look back as recently as 2008/9 to learn that a period of economic turmoil is swiftly followed by the market soaring to new highs. As data from the latest Numis Small Cap Index shows, after falling 39.6% in the year of the credit crisis, the index climbed 54.2% the following year.