July 2023

It was a difficult first quarter for platforms with the expectation of a recession and the cost-of-living crisis dragging on sentiment and flows. Two Interest rate hikes didn’t help either. Higher interest rates are usually bad for stock markets, but markets appeared to be Teflon-coated in Q1 with the FTSE 100 up 2%, the FTSE All World and S&P 500 up 7%, and the tech-heavy Nasdaq up a whopping 17%. This boosted platform assets to £880bn, although the industry’s £930bn high is still some way off.

After a difficult 2022, the D2C industry had been counting on business picking up in Q1 2023. For many D2C platforms, the ISA season is when they generate most of their flows so a buoyant Q1 is critical for annual revenues. However, a perfect storm of negative factors — rapidly rising interest rates, stubbornly high inflation, the ongoing cost-of-living crisis, a wave of public sector strikes and geopolitical uncertainty —had a major impact on investor sentiment. Despite this, assets rose by 4% on the back of strong stock markets and gross sales rebounded to £11.3bn – well up on Q422, and marginally ahead of Q122 figures.