Total Number of Investment Advisory Firms Increased by 111 Compared to Last Year... Contract Volume Up 7.8%

[Asia Economy Reporter Lee Jung-yoon] It has been confirmed that the number of investment advisory firms increased by 111 compared to the previous year, and the contract amount also grew by nearly 8% this year.

According to the "2021 Business Year Investment Advisory Firms' Operating Performance" announced by the Financial Supervisory Service on the 27th, as of the end of March this year, the total number of investment advisory firms was 579, an increase of 111 firms compared to the same period last year. The number of dual-operation investment advisory firms was 259, up by 19, and the number of specialized investment advisory firms was 320, up by 92.

Additionally, as of the end of March, the total contract amount was 729.3 trillion KRW, an increase of 7.8%, or 52.6 trillion KRW, compared to the previous year. In particular, advisory contract amounts increased significantly, totaling 31.1 trillion KRW, a 40.7% increase from the previous year. Discretionary contract amounts rose by 6.7% to 698.2 trillion KRW.

For dual-operation investment advisory firms, the total contract amount as of the end of March was 711.7 trillion KRW, a 7.5% increase compared to the end of March last year. Among the total contract amount, advisory contracts accounted for 17.7 trillion KRW (2.5%), up 46.3% year-on-year, and discretionary contracts were 694 trillion KRW (97.5%), up 6.8%. By sector, asset management companies held the majority with 78.7% of the total contract amount, followed by securities firms (20.8%) and banks (0.5%).

Fee income from April last year to March this year totaled 1.0537 trillion KRW, a 28.1% increase compared to the same period last year. Asset management companies earned the most in fee income at 690.8 billion KRW, followed by securities firms with 351 billion KRW and banks with 11.9 billion KRW. By business type, investment discretionary fees accounted for 78.7% of the total.

Regarding operational status, as of the end of March this year, the scale of discretionary assets managed by asset management companies was 618.5 trillion KRW, mostly consisting of discretionary contracts with insurance companies. Securities firms managed a total of 149.6 trillion KRW, and banks' discretionary ISA managed assets totaled 1.3 trillion KRW.

For specialized investment advisory firms, the total contract amount as of the end of March this year was 17.6 trillion KRW, a 21.8% increase compared to the previous year, with advisory contracts accounting for 76.1% and discretionary contracts 23.9%. Furthermore, contracts with institutional investors made up the largest portion at 68.6%, followed by individuals at 23% and general corporations at 8.4%.

From April last year to March this year, the net profit of specialized investment advisory firms was 147.8 billion KRW, a 39.1% decrease compared to the same period last year, narrowing the profit margin. Among the total 320 firms, 250 recorded profits while 70 recorded losses, with a profit ratio of 78.1%, similar to 77.2% the previous year. Fee income also decreased by 8.5 billion KRW to 184.3 billion KRW compared to the same period last year.

The scale of discretionary assets managed by specialized investment advisory firms was 4.3 trillion KRW, with the proportion of debt securities expanding to 25.8% and equity securities shrinking to 47.7%.

A Financial Supervisory Service official stated, "In the case of dual-operation investment advisory firms, there was an expansion in contract amounts and fee income compared to the previous year, along with trends such as the conversion of medium to large specialized investment advisory firms into asset management companies and the use of robo-advisors, indicating an expansion in advisory business operations." He added, "We plan to continuously analyze the advisory and discretionary business status of all financial companies in the future and identify risk factors."

He continued, "Specialized investment advisory firms are greatly affected by stock market fluctuations due to recent stock market downturns and intensified competition, raising concerns about poor business performance. We will strengthen monitoring of financial risks and investor protection issues arising from the decline in profitability of specialized investment advisory firms."

This content was produced with the assistance of AI translation services.