Execution-only profits outgrow wealth management - study

Execution-only (EO) businesses such as Hargreaves Lansdown have achieved much higher profit growth over the past five years than peers solely operating in the wealth management and private bank space, a study has revealed.

Groups focused on transactional business, rather than advice, have enjoyed a surge in profitability since 2006 as investors take greater control over their own finances and investment decisions. Improved technology and de-regulation have also allowed them to buy more asset classes with ease. Over five years – between 2006 and 2011 – EO stockbrokers have grown absolute profits by 165%, compared to wealth managers on 15%, research from ComPeer has found. In 2011 alone, Hargreaves, Barclays Stockbrokers,A J Bell and a host of other large EO groups grew profits by 27%, compared to inve...