13 Nov Platform sales slump in summer of uncertainty
Stock markets yoyoed and closed the third quarterly in roughly the same place as they started thanks to geopolitical concerns at home and abroad. In the UK, the third quarter kicked off with the appointment of hardline Brexiteer, Boris Johnson, as party leader and Prime Minister. His pledge to leave the EU on 31 October provoked fears of a no‐deal Brexit. At the same time, the global economy was beginning to slow and the US-China trade war added to uncertainty.
Despite flatlining markets, platform industry assets managed to rise by 2.5% to £691.3bn. With risk‐aversion high among advisers and investors, sales played a comparatively small part in asset growth. Gross sales for the quarter totalled £27.4bn, the lowest sales in three years, while net sales fell to £6.6bn, the lowest since Q412 when RDR was on the cusp of coming into force. Inflows are lower than general, but uncertainty is causing investor withdrawals to rise at a faster pace. As a result, the net to gross sales ratio is just 24%.
Sales have softened across the market and across all channels. We estimate that Hargreaves Lansdown1 continues to top for net platform sales across all channels. The reduction in DB transfer flows has shaken up the retail adviser platform rankings. Transact is in pole position for the third quarter running. Service and a robust adviser‐focused proposition are the factors driving sales.
Bella Caridade‐Ferreira, CEO of Fundscape said, “The DB pension pipeline has all but dried up, leaving the platform industry exposed to the vagaries of political brinkmanship and low investor morale. Investors are sheltering their hard‐earned cash from uncertainty and so sales are at all‐time lows. With a general election in December and the EU exit deadline in January, 2019 will be one of the worst years on record for the platform and asset management industries.’
Caridade-Ferreira said, ‘Until Brexit has been resolved, we’re unlikely to see an improvement in platform activity. Demand is still there; the fact that we’re grappling with Brexit doesn’t mean it has melted away. Investors are sitting on cash, so when the storm clouds finally lift, there could be a wall of money waiting to be invested.”
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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.
1 Hargreaves Lansdown reports in arrears. Assets are actual for this quarter, but sales are estimated.
2 Includes Elevate but excludes Parmenion. The data for Q319 is estimated.
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