20 Aug Sluggish ISA sales and soft Q218 for platforms
After significant falls in Q1, stock markets began to level out at the end of March… just in time for the last two weeks of the ISA season. By the close of Q218, the UK stock market had recovered most of its lost ground, with the FTSE 100 and FTSE All Share rebounding by 8% and performing better than most major stock markets in Q2.
On the back of this upturn, platform assets rose by £32bn to £604bn, smashing through the £600bn level for the first time on industry records. Hargreaves Lansdown registered the most growth in cash terms, with assets rising to £92bn. Meanwhile Cofunds’s assets stand at a remarkable £96bn. If markets continue to rise at a similar pace, it should be the first £100bn+ platform in the UK in Q318.
However, its recent upgrade problems may cast a shadow and make a dent in its asset base. Cofunds assets currently sit on a clone of its Aegon parent, but the two will eventually be merged. For the time being, they are being reported separately. In percentage terms, Aegon was streets ahead of other platforms with double-digit growth, but much of this was down to the ongoing transfer of its legacy business onto platform. In Q2, it represented a third of its asset growth.
Asset trends Q218
| Q417 | Q118 | Q218 | Q218 Grth £m | Q218 Grth % | YTD Grth | YTD Grth % | |
|---|---|---|---|---|---|---|---|
| Cofunds | 94,555.2 | 90,759.3 | 95,638.0 | 4,878.7 | 5.4 | 1,082.8 | 1.1 |
| HL e | 86,037.0 | 84,166.0 | 91,600.0 | 7,434.0 | 8.8 | 5,563.0 | 6.5 |
| Fidelity | 79,679.0 | 76,804.2 | 81,603.2 | 4,799.0 | 6.2 | 1,924.2 | 2.4 |
| St Life | 54,022.0 | 53,505.9 | 56,335.1 | 2,829.2 | 5.3 | 2,313.1 | 4.3 |
| Quilter | 51,469.5 | 50,883.3 | 53,679.3 | 2,796.0 | 5.5 | 2,209.8 | 4.3 |
| AJ Bell e | 33,566.4 | 33,816.7 | 36,700.0 | 2,883.3 | 8.5 | 3,133.6 | 9.3 |
| Transact | 29,700.0 | 29,753.0 | 31,884.0 | 2,131.0 | 7.2 | 2,184.0 | 7.4 |
| J Hay | 25,531.6 | 25,399.9 | 26,244.0 | 844.1 | 3.3 | 712.4 | 2.8 |
| Aegon | 22,191.0 | 22,637.0 | 25,472.0 | 2,835.0 | 12.5 | 3,281.0 | 14.8 |
| Aviva | 20,129.6 | 20,795.5 | 22,670.9 | 1,875.4 | 9.0 | 2,541.3 | 12.6 |
| ATS | 15,785.0 | 15,032.0 | 15,772.0 | 740.0 | 4.9 | -13.0 | -0.1 |
| Ascentric | 14,422.3 | 14,247.6 | 15,062.2 | 814.6 | 5.7 | 639.9 | 4.4 |
| Nucleus | 13,891.4 | 13,872.1 | 14,338.8 | 466.7 | 3.4 | 447.4 | 3.2 |
| Zurich | 8,680.0 | 8,710.0 | 9,490.0 | 780.0 | 9.0 | 810.0 | 9.3 |
| 7im | 7,767.2 | 7,752.1 | 8,222.3 | 470.2 | 6.1 | 455.1 | 5.9 |
| Next 4** | 13,946.0 | 18,338.0 | 18,877.0 | 539.0 | 2.9 | 4,931.0 | 35.4 |
| Total | 571,373.2 | 566,472.6 | 603,588.7 | 37,116.1 | 6.6 | 32,215.5 | 5.6 |
Assets looked good, but sales flows were disappointing in Q2. Stock market recovery came too late to have a benign impact on ISA activity. Nervous investors also put their pension business on hold, although the regulator’s uncomfortable scrutiny of DB transfers was undoubtedly a factor that gave financial advisers pause for thought. The net effect is that gross sales dropped to £29bn and net sales to £12.4bn – the lowest totals since Q317.
Top five platforms by gross and net sales
| Gross | Net | |||
|---|---|---|---|---|
| Cofunds | £5.9bn | Hargreaves Lansdown (est)* | £2.0bn | |
| Hargreaves Lansdown (est)* | £3.6bn | Aegon | £1.7bn | |
| Fidelity | £3.4bn | AJ Bell (est)* | £1.2bn | |
| Quilter | £2.4bn | Standard Life | £1.1bn | |
| Aegon | £2.2bn | Transact | £959m | |
Top five retail advised platforms by gross and net sales
| Gross | Net | |||
|---|---|---|---|---|
| Quilter | £2.4bn | Standard Life | £1.1bn | |
| Standard Life | £2.2bn | Aegon | £998m | |
| Transact | £1.4bn | AJ Bell (est)* | £960m | |
| AJ Bell (est)* | £1.4bn | Transact | £959m | |
| Aegon | £1.3bn | Aviva | £817m | |
Net sales were lower across the board at both the combined and retail advised level. Adverse market conditions can change the rankings considerably. Although Hargreaves maintained pole position, the rest of the net sales leader board looked different with Transact in the top five for the first time and Aviva dropping out for the first time in many quarters.
Looking at just retail advised propositions, and stripping out institutional, workplace and D2C business, paints a different picture. Standard Life was the only platform to register more than a billion in retail advised sales, while newly minted Quilter slipped off the retail advised leader board for the first time in more than a year.
Assets and sales by product Q218
| ISAs | Sipps/pensions | DC pensions | Rest | Total | |
|---|---|---|---|---|---|
| Assets (£m) | 160,328.0 | 224,845.8 | 33,993.5 | 184,422.4 | 603,589.7 |
| % of total | 26.6 | 37.3 | 5.6 | 30.6 | 100.0 |
| Gross sales Q2 18 (£m) | 5,294.0 | 11,753.7 | 1,595.4 | 10,419.7 | 29,062.7 |
| Gross sales Q2 18 (%) | 18.2 | 40.4 | 5.5 | 35.9 | 100.0 |
| Net sales Q2 18 (£m) | 2,297.2 | 7,483.3 | 198.4 | 2,388.6 | 12,367.5 |
| Net sales Q2 18 (%) | 18.6 | 60.5 | 1.6 | 19.3 | 100.0 |
Bella Caridade-Ferreira, CEO of Fundscape said, “Thanks to the ISA season the second quarter is usually the best of the year, but it’s looking like it might be the worst. Stock market volatility and global geopolitical uncertainty has unnerved investors and they’re staying away in droves.”
Caridade-Ferreira said, “The first half of the year usually sets the tone for the second half, and with heightened political tensions unlikely to dissipate any time soon, that tone is likely to be risk averse and soft. Platforms and fund groups need to plan and prepare for the difficult months ahead.”
Download full press release here.
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. A total of 21 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. AJ Bell is preparing for stock-market flotation so its figures have been estimated.
**Next four: Novia, Raymond James, Hubwise and Embark.
Photo by Shannon Tremaine on Unsplash