Advice wins out in a falling market

3 April 2002

Professional portfolio managers lessened the impact of falling markets on their clients' portfolios throughout 2001, while investors who dealt for themselves without advice saw a sharp fall in their investments, the ComPeer survey for 2001 reveals.

In spite of a 16 per cent fall in the FTSE-100 during the year, the total value of funds held by APCIMS member firms at the end of 2001 fell significantly less, the survey shows. Execution only share trading volumes fell by 25 per cent whilst advice based trading rose by 11 per cent.

Angela Knight, Chief Executive of APCIMS said:-

"While poor markets have affected all investors, the numbers clearly underline the importance of the maxim 'if in doubt, take advice.' The good news is that the private investor is still in the market and continuing to become more comfortable with electronic shareholding. However, it is of real concern that in these difficult times firms are reporting such a significant increase in costs as a result of the changes to regulation."

Key findings of the 10th annual Private Client Stockbroking and Fund Management Survey include:

• securities worth around £267 billion were held for private clients by UK firms on
  31st December 2001 (from £306 billion on 31st December 2000). This is a 13 per cent fall over a period when the FTSE 100 fell 16 per cent;

• online trades in the last quarter of 2001 accounted for almost one in every three execution-only trades (32 per cent);

• 25,259 people worked in private client investment management and stockbroking (an increase of more than 1,000 in the year); notably the numbers of compliance staff increased by 24 per cent;

• individual investors accounted for almost two-thirds of the bargains on the London Stock Exchange - some 12.5 million bargains (institutions undertook 7.1 million);and

• the percentage of business transacted via nominees rather than certificates, continued to rise.

Notes to editors

1. The Private Client Stockbroking and Fund Management Survey 2001 is produced by ComPeer Ltd using information collected from 84 APCIMS members, London Stock Exchange and Crest.
2. APCIMS represents the overwhelming majority of UK private client stockbrokers and investment managers, who together act for more than 12 million shareholders.
3. For a summary of the ComPeer report's key findings click here.
   

For further information call:

Kevin Sloane, Head of Information, APCIMS (office 020 7247 7080; mobile 07917 406939; email kevins@apcims.co.uk)