Investing is ‘a troublesome promote’ for younger folks since pandemic, says new AJ Bell chief

Investing has change into a “robust promote” for youthful generations grappling with the price of residing disaster, bringing to an finish the coronavirus-era increase in younger folks leaping into the markets, in response to the brand new head of one of many UK largest funding suppliers.

Michael Summersgill, who this month succeeded founder Andy Bell as chief government of AJ Bell, mentioned the squeeze on incomes from inflation and plunging markets this yr have contributed to a major slowdown in buyer progress, particularly amongst youthful cohorts.

The FTSE 250 group final yr introduced a bid to focus on buyers of their 20s and 30s with a zero-trading-fee funding app, referred to as Dodl, capitalising on a world surge in shopper progress for do-it-yourself funding suppliers as folks put their enforced lockdown financial savings to work in booming markets.

The 38-year-old chief government acknowledged that the transfer to win younger buyers got here too late, with Dodl launching this April into the enamel of a brutal sell-off, which has wiped 10 per cent off the common AJ Bell buyer portfolio up to now this yr.

“Possibly if we had made some . . . choices extra rapidly 4 years in the past we’d have launched into that increase interval, and that will have been beautiful. However no, we launched it after. It’s nonetheless an incredible product, however it’s now a troublesome sale,” Summersgill mentioned.

The brand new app’s common person is aged 38, decrease than the standard purchasers on AJ Bell’s essential funding platform who are typically wealthier and nearer to retirement.

Youthful would-be buyers are experiencing a “actual squeeze” on their family funds from rising power payments and inflation, leaving them with much less cash to take a position on the finish of the month, Summersgill added.

Nevertheless, Summersgill, who took the highest job after a yr as deputy chief government and a decade as chief monetary officer, mentioned the long-term demographic drivers of progress for funding platforms had been nonetheless in place, such because the shift from closing wage pension to people saving for retirement.

Regardless of Dodl’s bumpy begin, he expressed confidence that “in 5 years’ time it will likely be in an incredible place”. The group didn’t disclose the variety of Dodl prospects, who can pay an annual cost of 0.15 per cent on their portfolios.

AJ Bell has continued to develop its platform each for DIY purchasers and monetary advisers, including £5.8bn in internet new belongings and 58,000 prospects within the yr to the top of September. Nevertheless, that progress marks a pointy comedown from the £7bn of internet inflows the prior yr, throughout which a report 88,000 new prospects joined the platform.

Summersgill is about to pursue a special technique from some rivals, together with market chief Hargreaves Lansdown, which can be attempting so as to add providers equivalent to monetary recommendation for his or her older and wealthier purchasers.

“I feel a lot of the opponents are trying on the larger finish of the [direct- to-consumer] market and saying how can we provide them supplementary providers,” he mentioned. “Whereas we’re trying on the different finish of the market and saying how can we go for a broader group of consumers.” 

He additionally plans to put money into branding, in a bid to alter the picture of investing for a brand new era of consumers.

“I feel it’s seen as this gray, uninteresting, impenetrable world for folks. If we will really faucet into a number of the optimistic emotion . . . then I feel that we may make some headway.”