AJ BELL PLC "When Cost Growth Works" (Buy) Tam

Research evidence excerpt

AJ BELL PLC "When Cost Growth Works" (Buy) Tam

AJ BELL PLC UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Can AJ Bell continue to win market share?

Yes. AJB has proven ability to win share, and we see it positioned well to continue to do so, thanks to

its competitive pricing and service provision, alongside investment into product range and brand. We

expect AJB to continue to invest to support share gains, with net benefit to profit growth. Whilst not

disclosed by AJB, we estimate interest income is a significant PBT contributor. With stable/rising

interest rate expectations, this should provide a stable underpin to revenue.

Q: Is AJ Bell well positioned for AI disruption and opportunities?

Yes, we believe so. AJB has deployed AI in numerous areas, at scale, in its operations, and is exploring

ways in which AI can be used in both D2C and Advised propositions at the front end. We see the

most immediate AI threat as easier pricing comparisons for commoditised products. This favours AJB

which has a track record of reinvesting to support lower pricing and improved customer experience.

AJB has found it performs slightly better when people use ChatGPT to do investment research vs

Google Search, because the AI search focuses on TrustPilot scores and brand awareness. As a Dual

Channel platform, we see AJB in a unique position in the AI debate, with the potential to benefit both

from efficiency improvements - e.g. allowing advisers to instruct across a portfolio of clients through

a conversational interaction - as well as from future use cases where AI may be able to help D2C

customers self-help with AI advice tools.

Q: Can we expect capital returns to be part of the investment case?

Yes.