Platform flows dry up in Q3 meltdown

Platform flows dry up in Q3 meltdown

Platform flows dry up in Q3 meltdown

The going got exceptionally tough for the platform industry in the third quarter. The cost-of-living crisis, rampant inflation, the uncertain economic outlook and political instability together had a huge, negative impact on investor confidence. Investors were spooked, abandoned risk in their droves and retreated to the safety of cash. As a result, gross sales fell to £26bn, the lowest since the fourth quarter of 2016, while net sales plummeted to just £4.4bn — the lowest industry net sales in over a decade.

Assets shrank by a more sedate 1.5% to £825bn in the three months to September, less than the FTSE 100’s 3.8% decline. However, since the start of the year, the industry has lost a total of £105bn in assets, with an inevitable impact on platform revenues. Fortunately, some platforms can boost their flagging revenues with higher clippings from the rise in the interest rates and cash holdings on platform.

Apart from True Potential, all platforms sustained a marked drop in flows in the third quarter. True Potential was the quarter’s stand-out winner, topping both the all-channel and the advised platform net sales tables thanks to its vertically integrated model and compelling advice firm offer. Quilter, also a vertically integrated platform, was in the lead for advised platform gross sales for both the quarter and the year to date.

Bella Caridade-Ferreira, CEO of Fundscape said, ‘The cost-of-living crisis is a global phenomenon, but Trussonomics led to a market meltdown and sent investors running for the hills and retreating to the safety of cash. A new government and the forthcoming budget should hopefully stabilise the situation.

‘The UK retail wealth management industry’s long-term fundamentals remain strong. But with the UK in recession and likely to remain so for at least a year, it will be a bumpy ride for the platform industry as the world adjusts to a new normal of higher inflation and lower disposable income. Consumers will need a lot of support over the next couple of years. Vertically integrated platforms are adept at supporting both advisers and consumers — other platforms may need to take a leaf out of their books.’

Download full press release here.

Notes to Editors:

The Platform Report is a confidential report published by Fundscape.  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.

1 Hargreaves Lansdown reports a quarter in arrears. Assets are actual from trading update.

For further information or background please contact: press@fundscape.co.uk

 

Photo by Marcelo Novais on Unsplash