The third quarter of 2022 saw the continuation of a difficult year for platforms, as the uncertain economic and political outlook, high living costs, and spiralling inflation knocked investor confidence. Data provided by consultancy firm the Lang Cat and research house Fundscape makes for grim reading for the sector as it continues to be buffeted by this year’s market headwinds.
Fundscape’s Platform Report found gross platform sales had fallen to £26bn ($29.7bn, €29.6bn) during the quarter, the lowest figure since Q4 2016. The Lang Cat had the number lower still, suggesting that gross sales across all channels had fallen to £22.3bn. According to its data, this represents a drop of more than 20% on the previous quarter.
Each data set demonstrated that net platform sales had also dropped considerably, as Fundscape reported that Q3’s figure of £4.4bn was the lowest seen in over a decade. While the Lang Cat had the number slightly higher at £4.7bn, the picture still appears grim for the sector.
Headline Figures
| All platform assets | Quarterly asset growth | Quarterly asset growth % | Gross sales | Net sales | Net/gross ratio | |
|---|---|---|---|---|---|---|
| Q3 2022 | £825.3bn | -£13.1bn | -1.6% | £26.1bn | £4.4bn | 16.9% |
| Q2 2022 | £838.4bn | -£52.2bn | -5.9% | £31.4bn | £7.8bn | 24.8% |
| Q1 2022 | £890.7bn | -£39.4bn | -4.2% | £35.7bn | £11.9bn | 33.3% |
| Advised platform assets | Quarterly asset growth | Quarterly asset growth % | Advised growth sales | Advised net sales | Net/gross ratio | |
| Q3 2022 | £525.3bn | -£7.8bn | -1.5% | £15.3bn | £4.9bn | 32% |
| Q2 2022 | £533bn | -£33.5bn | -5.9% | £16.6bn | £7bn | 42.1% |
| Q1 2022 | £566.6bn | -£14.7bn | -2.5% | £20.2bn | £9.5bn | 47% |
Since the beginning of 2022, according to the Platform Report, the industry has lost £105bn in assets, and this has hit platform revenues. Fundscape added, despite this, some platforms are able to boost their flagging revenues with higher clippings from the rise in the interest rates and cash holdings on platform.
Fundscape outlined the top performers across all platform channels in the third quarter of this year:
| Top five platforms (all channels) by gross sales Q3 2022 | Top five platforms (all channels) by net sales Q3 2022 | ||
|---|---|---|---|
| Aegon | £6.2bn | True Potential | £1.3bn |
| Fidelity | £3.8bn | AJ Bell | £1.2bn |
| Hargreaves Lansdown | £2.6bn | Aviva | £0.89bn |
| AJ Bell | £2.1bn | Transact | £0.73bn |
| Quilter | £1.7bn | Fidelity | £0.63bn |
Apart from True Potential, all platforms sustained a marked drop in flows in the third quarter.
Bella Caridade-Ferreira, CEO of Fundscape, said that the current economic environment has “sent investors running for the hills” and retreating to the safety of cash.
She added: “The UK retail wealth management industry’s long-term fundamentals remain strong. However, 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.”
Rich Mayor, senior analyst at the Lang Cat, observed that “a huge £76bn” had been wiped off all channel assets since the beginning of the year, and he also highlighted the negative implications for platform revenues.
Below are the advised channel platforms with the most assets under administration (AUA):
| Platform | Advised channel AUA Q3 2022 |
|---|---|
| Abrdn | £66.93bn |
| Quilter | £64.63bn |
| Transact | £50.07bn |
| AJ Bell Investcentre | £44.80bn |
| Fidelity Adviser Solutions | £43.91bn |
Mayor added that those with vertically integrated advice arms fared best, with True Potential and Quilter topping the advised sales tables this quarter.
| Platform | Advised channel gross inflow Q3 2022 |
|---|---|
| Quilter | £1.70bn |
| True Potential | £1.58bn |
| Aviva | £1.55bn |
| Transact | £1.50bn |
| AJ Bell Investcentre | £1.50bn |
| Platform | Advised channel net inflow Q3 2022 |
|---|---|
| True Potential | £1.24bn |
| AJ Bell Investcentre | £0.90bn |
| Aviva | £0.85bn |
| Transact | £0.75bn |
| Fidelity Adviser Solutions | £0.33bn |
Mayor said: “The totals posted this quarter look similar to those posted during the pandemic. But that’s where the similarities end. The way out of the pandemic through vaccinations was clear and buoyant markets, as well as a bunch of cash waiting to be invested, led to record sales in 2021.
“But all the asset growth from the past year has been wiped away and this time there’s no clear way out. The current high inflation, high tax, high interest rates environment means there’s not going to be anything like the flood of platform business we saw in 2021.”
Ending on an even more sombre note, he said that he could not see these numbers picking up much, if at all, in 2023.
This article first appeared on our sister publication Portfolio Adviser.
