10 Mar The year ends on a high for the platform industry
After a year unlike any other in recent history, the fourth quarter was home to an unexpected and welcome upturn in fortunes and the first shoots of optimism for 2021 for the platform industry. Stock markets surged in November with the FTSE All Share index rising by 12.4% in the month, on the back of Covid19 vaccine approvals and Joe Biden winning the US presidential elections. This resulted in industry assets expanding by 7.6% in the fourth quarter to £785bn. To provide some context, annual growth was just £65bn, or 9%.
Last minute rally
As well as the logistical difficulties of running businesses from home, platforms have been affected by poor investor sentiment for most of the year. That changed in November, and the good news led to a surge in sales in the last weeks of the year. Net sales for the October to December period totalled £8bn, bringing the annual total to £36bn.
The platform tables below include all distribution channels. Some platforms did better than others. Fidelity recorded its best quarterly sales since 2016, putting it in pole position and £500m ahead of its nearest competitors. Having re-platformed the year before, Fidelity is now attracting substantial new business. On an annual basis, Fidelity’s sales are up 81% on the previous year.
AJ Bell was also home to stellar sales for both the quarter and the year as a whole. It is no coincidence that both platforms have multi-channel businesses and benefited from strong advised and direct-to-consumer activity.
Despite the difficult backdrop, adviser platforms have adapted well and accounted for 70% of net platform flows in 2020. Aviva and True Potential stormed into first and second place in the fourth quarter with net sales of £1bn+, both platforms registering a substantial increase against the third. Like Fidelity, Aviva’s re-platforming experience is now behind it and its competitive pricing model is helped it to win new business. Meanwhile, True Potential has benefited from a significant rise in advisers joining its network during the pandemic.
Bella Caridade-Ferreira, CEO of Fundscape said, ‘The last few weeks of the year were a boon for platforms and investment managers alike. It took time for platforms and adviser firms to adapt to life under Covid, but 2020’s net sales were actually better than the previous year’s when Brexit was the main drag on flows. Nonetheless, many investors have stayed on the side-lines, and a considerable wall of money has built up that should flow into the platform industry in 2021. Barring no major incidents of course.’
‘It looks as though the UK economy could be back to normal by the summer. That will work wonders on investor sentiment and platforms are already reporting a good start to the ISA season. As a result, we expect the first half of 2021 to be home to buoyant sales.’
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 in arrears. Assets are actual, but sales are estimated.
2 Includes Elevate but excludes Parmenion.
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