12 Feb Platform industry highlights 2019
The PLATORM INDUSTRY is in extended lockdown as several public limited companies will be reporting their full-year results between now and 17th March 2020. We’re unable to provide individual platform data until the last PLC has reported its results. As a result, this is the first of two press releases for Q419 /2019 platform data.
2019 was a tough year for fund groups and platforms alike with geopolitical uncertainty and Brexit concerns severely dampening investor sentiment. It didn’t help that the DB transfer pipeline that had buoyed the industry in the previous year all but dried up in the first half of 2019. Thanks to strong stock markets, year-on-year growth was robust, but net sales plummeted to new lows.
Headline figures for 2019
| Assets | Asset Grth | Asset Grth % | FTSE All Share | Gross sales | Net sales | Net/gross ratio % | |
|---|---|---|---|---|---|---|---|
| 2017 | £571.1bn | £98.7bn | 20.9% | 9.0% | £121.7bn | £55.7bn | 45.7% |
| 2018 | £601.0bn | £29.9bn | 5.2% | -12.9% | £116.5bn | £44.9bn | 38.5% |
| 2019 | £713.1bn | £112.1bn | 18.7% | 14.2% | £114.7bn | £29.7bn | 25.9% |
- Platform assets under administration rose by 3% in the fourth quarter to £713.1bn. Annual asset growth for the year was a robust 19% — or £112bn — a figure that was almost four times higher than the £30bn achieved in 2018. The upturn in assets was mainly the result of increased asset values, the FTSE All Share recording an increase of 14.2% for the year.
- Stock markets may have been strong, but Brexit cast a long and dark shadow over investors who decided to sit on the fence until the outlook was clearer. In uncertain times or adverse markets, it is no surprise to see gross sales rise and net sales fall because investors stay away or scramble to safe havens. But 2019 was the third year of lower gross sales — a clear sign that any retreats to safe-haven had already flushed through the system and new money was slowing to a trickle. Annual gross sales were £114.7bn, down 2% against the previous year.
- More worrying is the fact that net sales for the year amounted to just £29.7bn –the worst net sales figure since 2013. This year’s sales figure was down 34% on 2018 and a whopping 47% on 2017’s net sales of £56bn. As a result of the poor net sales showing, the net sales ratio, which used to hover around 49% to 50%, has plummeted to just 25.6%.
- The year ended on a high note. Having trended downwards all year, net sales rose in the last quarter to just over £8bn (still well below par) following the Conservative party’s decisive general election win and the general expectation that the doldrums would finally lift.
Product mix 2019
| ISAs | Sipps & Pensions | DC Pension | Rest | Total | |
|---|---|---|---|---|---|
| Assets (£m) | 173,434.0 | 305,874.2 | 46,428.8 | 187,354.2 | 713,091.2 |
| % of total | 24.3 | 42.9 | 6.5 | 26.3 | 100.0 |
| Gross sales 2019 (£m) | 17,845.1 | 42,958.5 | 9,595.6 | 44,267.3 | 114,666.5 |
| Gross sales (%) | 15.6 | 37.5 | 8.4 | 38.6 | 100.0 |
| Net sales 2019 (£m) | 3,685.3 | 22,706.5 | 679.4 | 2,615.4 | 29,686.6 |
| Net sales (%) | 12.4 | 76.5 | 2.3 | 8.8 | 100.0 |
- Sipps & pension wrappers account for 43% of platform assets. Although DB transfers have slowed, Sipp and pension activity dominated and accounted for 77% of overall net sales.
- ISAs assets represent 24% of the industry total, but net sales were at their lowest level since the financial crisis years of 2008 and 2009. The 2019 ISA season was a non-starter because it coincided with the first Brexit deadline. Although pension activity is the industry’s focus, ISA business is bread and butter for the industry.
Fundscape CEO, Bella Caridade-Ferreira, said ‘2019 was a tough year for the investment industry. The all-important ISA season in the first half of the year was a damp squib with half the usual volume of net sales thanks to last-minute Brexit negotiations and political brinkmanship. This set the tone for the rest of the year.’
With the outlook crystal clear after the general election, sales flows rose markedly in the last weeks of December. Since then, platforms have reported bumper January sales, so things are looking up for a bumper ISA season and a strong start to 2020.”
Download the full press release here.
Notes to Editors:
The Platform Report is a confidential report published by Fundscape LLP. A total of 19 platforms are included in the analysis. Platform coverage is estimated at 98% of the platform universe. For further information or background please contact: Bella Caridade-Ferreira, tel +44 (0)20 7720 1183, bella@fundscape.co.uk
Photo by chris panas on Unsplash