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2023 was a second tough year for the direct investment platform market. Headwinds buffeted the market and consumer confidence took a pummelling from news of the Israeli-Hamas war and rampant inflation prolonging the cost-of-living crisis. Despite the wall-to-wall gloom, markets performed strongly in the final quarter, taking total direct market assets to £320bn and giving platforms a welcome boost to revenues. Hargreaves Lansdown, interactive investor and AJ Bell were the fastest growing platforms this year with Hargreaves Lansdown adding the equivalent of the industry’s annual net sales in assets.

With a disappointing ISA season having set the tone for the rest of 2023, the third quarter was always going to be a struggle. But thanks to modest upturns in stock markets, assets crept back over the £300bn mark, regaining a significant milestone for the direct platform market. Flows, however, disappointed with gross flows slumping to below £9bn and net flows dropping to a dismal £1.8bn — not their lowest ever, which was £1.5bn in the last quarter of 2022, but not far off it either.

The trading environment in the second quarter provided no respite from the headwinds that have been pummelling the direct platform market. Platforms have been helped by modest market gains, meaning the majority were able to post positive asset growth. Gross flows were a comfortable £11.4bn for the quarter, but the all-important net figure was in the doldrums at £3.9bn as investors adjusted to higher living costs and prioritised cash products.

After a difficult 2022, the D2C industry had been counting on business picking up in Q1 2023. For many D2C platforms, the ISA season is when they generate most of their flows so a buoyant Q1 is critical for annual revenues. However, a perfect storm of negative factors — rapidly rising interest rates, stubbornly high inflation, the ongoing cost-of-living crisis, a wave of public sector strikes and geopolitical uncertainty —had a major impact on investor sentiment. Despite this, assets rose by 4% on the back of strong stock markets and gross sales rebounded to £11.3bn – well up on Q422, and marginally ahead of Q122 figures.

Rampant inflation, fuel price increases, national insurance hikes and the cost-of-living crisis took an inevitable toll on investor sentiment and market prices – and that was before Russia invaded Ukraine. As a result, the FTSE All World was down 6% for the quarter, sending direct assets below £300bn once again (to £297bn).