The financial advice market has been going through a period of consolidation over the last five years and now the UK platform industry could be set for the same fate, according to Martin Barnett, head of content at Fundscape.
D2C platforms have taken a hit as investors have had to adjust to higher living costs and prioritised cash products as a result.
Barnett said: “The longer high inflation and interest rates continue, the greater the pressure on smaller platforms. We don’t expect the situation to improve until the mid-2024 at the earliest.
“The door is therefore well and truly open for larger players to potentially acquire distressed platforms at knockdown prices.”
Bella Caridade-Ferreira, chief executive of Fundscape, warned back in March that 2023 and the first half of 2024 would be difficult for platforms. She argued that high inflation, interest rates and taxes would squeeze investors’ disposable income and make platforms struggle.
This news comes during Fundscape’s latest report which showed that while gross flows in Q2 jumped to their second highest level in the last four years, so did outflows. This was due to the cost-of-living crisis.
At just £3.9bn ($4.97bn, €4.52bn) for the quarter, net sales were down by 7%, 46% and 29% against the same quarter in the previous three years, respectively.