13 Feb The platform industry in 2022 – from boom to gloom in a year
We will publish our full platform results on 9th March 2023, the date the last PLC-owned platform reports its results to the stock market. This press release only reviews assets and flows at a market level in 2022.
After breaking every record going in 2021, the industry went from boom to gloom in 2022. Volatile stock markets pushed industry assets down by 8% to £853bn, despite a stock-market jump in the fourth quarter. Lacklustre gross and net flows didn’t help either — gross annual flows were down 27% compared to 2021 while net flows fell by an eye-watering 57%. Annual flows were stronger in 2020, the year of the pandemic and lockdowns!
Fundscape CEO, Bella Caridade-Ferreira, said ‘Investors have been spooked. We’ve had a series of economic shocks squashed into just one year. Russia invaded Ukraine leading to surging fuel prices and rampant inflation, a new PM and a mini budget that sparked a major market meltdown, another PM and an autumn budget that missed the mark, ongoing widespread public sector strikes and labour shortages. And then there’s the long-term impact of Brexit…
‘But as the saying goes, this too will pass. UK PLC will eventually adapt. The need to save and invest for the long term has not gone away and investors will start to return. The question is when…’
FIVE-YEAR GROWTH PROJECTIONS TO 2027
2023 will be a year of higher inflation, higher interest rates and higher taxes. Disposable income will be reduced and the ability to save and invest negatively affected. Cautious investors who can still afford to save and invest will likely be happier with cash and deposit accounts – even if inflation rapidly erodes their cash balances.
Investor sentiment will be a big factor. 2023 and potentially the first half of 2024, will be difficult for the retail wealth management industry as recession drags the economy down further. There will be a 12-18-month time-lag as savers and investors adjust to a new normal. After this, we expect life to start to return to normal, investors to adapt, and risk to return to the table again.
Historical analysis shows that even during economically weak periods, industry assets continue to grow at a modest rate. As a result, and given the poor economic outlook, our growth rates are exceptionally conservative at 8% for pessimistic, 11% for realistic, and 16% for optimistic scenarios. We expect retail advised platform business to grow steadily over the next five years predicated on the ongoing demand for advice, especially in the pre- and post-retirement phases.
Notes to Editors:
The Platform Report is a confidential report published by Fundscape UK Ltd. A total of 19 platforms are included in the analysis. Platform coverage is estimated at 98% of the platform universe.
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