13 Nov Platform assets to hit £1.4trn by 2022
After an ISA-fuelled first half of the year, platform activity in the third quarter was more muted. The summer season is traditionally quieter and political and economic uncertainty was on the rise. However, the steady flow of pension money meant that platform business remained strong. Stock markets flat-lined in the quarter, but platform assets increased by £19bn (3.6%) to £560bn, nonetheless.
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There are three platforms with £75bn+ assets, together accounting for 45% of industry assets. Cofunds is the largest platform and the first to break through the £90bn ceiling. Not far behind is Hargreaves Lansdown on £82bn. The D2C player also topped the asset growth table with growth of £12bn, demonstrating that there is strong demand for investment solutions among DIY investors.
Industry gross and net sales in Q317 fell slightly to £30bn and £13bn respectively, but were still very high by historical standards. The strength of investment activity in 2017 has been such that year-to-date gross and net sales of £93bn and £42bn are 38% and 50% higher than like-for-like sales in 2016. Platforms with a strong pension heritage performed particularly well. With conversions stripped out, Aegon’s Q3 net sales fall to £752m, putting Standard Life in the lead with £1.7bn.
Bella Caridade-Ferreira, CEO of Fundscape said, “ISA activity was less pronounced in the third quarter but pensions picked up the slack, generating around 70% of platforms’ net flows.” This was due to a combination of people taking advantage of their pension freedom rights and a steady pipeline of DB transfers. The pension factor is expected to remain strong for a number of years. Demand for pension advice and a glide path that goes beyond retirement means the retail adviser channel will benefit the most from this trend. In 2017, it accounts for 65% of industry net sales.
Caridade-Ferreira said, “Despite Brexit and the regulatory headwinds facing the industry in the next few years, the platform industry is the de facto conduit for pension and investment solutions. As a result, platform growth is likely to continue in the same vein in the medium term. We expect platforms to evolve considerably as delivery and investment solutions become more tightly integrated. Taking into account various regulatory, political and economic factors, our realistic five-year projection is for platform assets to reach £1.4trn by 2022.”
Notes to Editors:
The Platform Report is a confidential report published by Fundscape LLP. To subscribe to the report, platforms must contribute asset and sales data on a quarterly basis. For further information about the report and Fundscape, please visit www.fundscape.co.uk.
A total of 19 platforms are included in the analysis. Platform coverage is estimated at 98% of the platform universe.
*For timing reasons and because the data is market sensitive, Hargreaves Lansdown reports its figures to Fundscape a quarter in arrears. However, latest assets are correct as per the latest trading statement.