Platforms had their worst three months in a decade in the third quarter as market wobbles and a wave of bad news took their toll, according to a new report from platform and investment research company Fundscape.
Fundscape said that the going got “exceptionally tough” for the platform industry in the third quarter.
The cost-of-living crisis, high inflation, economic turmoil and political instability had a “huge, negative impact on investor confidence,” the firm said.
Fundscape said investors were spooked and abandoned risk, often retreating to the safety of cash.
Gross sales fell to £26bn, the lowest since the fourth quarter of 2016, while net sales plummeted to just £4.4bn — the lowest industry net sales in over a decade.
Assets shrank more modestly by 1.5% to £825bn in the three months to September, less than the FTSE 100’s 3.8% decline, Fundscape said.
The figures are included in Fundscape’s quarterly Platform Report. A total of 19 platforms are included in the analysis. Platform coverage is estimated at 98% of the platform sector.
Since the start of the year Fundscape said the industry has lost £105bn in assets and this was hitting platform revenues.
Some platforms were able to boost flagging revenues with takings from the rise in interest rates and cash holdings on platform.
Vertically integrated platforms, which combine a platform with an advice arm, did better than other platforms.
True Potential was the quarter’s “stand-out winner”, topping the all-channel and the advised platform net sales tables due to its vertically integrated model and advice offer, Fundscape said.
Quilter, also a vertically integrated platform, was the leader for advised platform gross sales for both the quarter and the year to date.
Bella Caridade-Ferreira, CEO of Fundscape, said: “The cost-of-living crisis is a global phenomenon, but ‘Trussonomics’ led to a market meltdown and sent investors running for the hills and retreating to the safety of cash. A new government and the forthcoming Budget should hopefully stabilise the situation.
“The UK retail wealth management industry’s long-term fundamentals remain strong. But with the UK in recession and likely to remain so for at least a year, it will be a bumpy ride for the platform industry as the world adjusts to a new normal of higher inflation and lower disposable income.
“Consumers will need a lot of support over the next couple of years. Vertically integrated platforms are adept at supporting both advisers and consumers — other platforms may need to take a leaf out of their books.”
• The platform woes were confirmed by another report on platforms out this week from consultancy the lang cat. The lang cat said platform growth from 2021 has been wiped out and sales continue to fall. It was a “tumultuous quarter” as platform market asset values continued to fall. Gross sales across all channels were £22.3bn, down 20.7% on the previous quarter, while net sales were just £4.7bn, the lowest total on the lang cat’s records and -48.9% down on Q2 2022’s total. It said the advised channel fared better with advised gross sales down -16.9% on last quarter (Q3 2022: £16.3bn) and net sales of £5.5bn (-39.4%).
