More than half of dedicated investment advisory and discretionary management firms recorded losses last year. Analysis shows that 6 out of 10 firms faced losses as the stock market stagnated amid limited market size and intensified competition.
The Financial Supervisory Service announced on the 16th the '2024 fiscal year status of investment advisory and discretionary management operations.' More than half of dedicated investment advisory firms typically operate on a fiscal year running from April to March, thus the results were compiled as of the end of March this year.
As of the end of March, the number of investment advisory and discretionary management firms was 793, an increase of 69 compared to March of last year. There were 350 mixed operations and 443 dedicated firms.
The total contract amount of investment advisory firms (advisory and discretionary) reached 742.9 trillion won, an increase of 23.8 trillion won (3.3%) compared to a year ago. The advisory contract amount was 32.2 trillion won, which is an increase of 2.1 trillion won (7%) compared to the same period last year, while the discretionary contract amount reached 710.7 trillion won, an increase of 21.7 trillion won (3.1%) year-on-year.
From April of last year to March of this year, the net profit of dedicated investment advisory and discretionary management firms was 21.7 billion won, down 11.2 billion won (34.2%) compared to 32.9 billion won in the same period last year. Among the total of 443 firms, 178 were profitable, while the remaining 265 recorded losses. The proportion of profitable firms decreased to 40.2% from 53.7% the previous year.
The commission revenue of dedicated investment advisory firms was 210.8 billion won, an increase of 57.5 billion won (37.5%) compared to the same period last year, while gains and losses from proprietary asset management decreased by 59.9 billion won (65.1%) to record 32.2 billion won.
The FSS noted, "Mixed firms continue to grow, primarily focusing on asset management companies," and analyzed, "Dedicated firms are faced with intensified competition and polarization due to the limited market size."
It also added, "We will continuously support the stable provision of services while launching an innovative service that allows part of retirement pensions to be managed through discretionary firms' robo-advisors (RA)."