Profit before tax dropped from £1.09 billion ($1.71 billion) to £943 million year-on-year despite a 14.7 per cent increase in investment assets from £350 billion to £402 billion for the same period.

Among these, cash and direct securities showed the biggest increase, going up by 19.8 and 17.6 per cent respectively. Collectives went up by 10.3 per cent, although alternative investments which include hedge fund and private equity only improved by a marginal 4.7 per cent.

Despite the global movement towards recovery, revenue took a hit of 2.7 per cent. Only revenues from certain fees - investment management, commission and brokerage and administration fees – increased, by a year-on-year average of 1.4 per cent.

Due to interest rates being kept low treasury revenue fell by 11.8 per cent; banking and wealth planning fees also went down by 7 and 12.9 per cent respectively.

Trading activity has gone up, as market bargains for members of the London Stock Exchange and PLUS have almost doubled from 2008 end to 2009 end, ComPeer said. The value of these trades has increased by 22.8 per cent from £85 billion to £105 billion year-over-year.

However costs went up by 1.1 per cent and staff numbers dipped 1.9 per cent. The industry lost 571 employees over the year, the majority of whom were from front office units.

With the looming implementation of the retail distribution review, the industry faces further challenges in adapting to the changes in regulation. The report notes, however, that the wealth management industry remains a sector of opportunity.

This is the twelfth industry report produced by ComPeer which has been providing research and benchmarking services to the industry for 18 years.