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IFA-focused platforms buck downward trend: report
The protracted eurozone sovereign debt crisis and volatile stock markets have taken their toll on the UK platform industry, research by a research consultancy has shown.
Fundscape’s confidential Platform Report revealed that assets were dragged down in the wake of the FTSE 100’s third-quarter fall of 13.7 per cent, causing assets under administration to drop.
The 15-page report found assets under administration of the 14 platforms surveyed fell by 2.3 per cent to £163.9bn in the third quarter.
However, a few IFA-centric platforms were able to buck the trend, with Axa Elevate, Nucleus and Ascentric being the most noteworthy.
Bella Caridade-Ferreira, director of Fundscape and author of the Platform Report, said: “The vast majority of platforms saw their sales volumes shrink during the quarter.
“Until the outlook improves, or the direction of the markets becomes clearer, investors and their advisers will be ‘uber-cautious’ when it comes to new investment. The quarter’s shifts and transfers will give way to a leaner sales environment.
“What helped to maintain the platform industry’s sales momentum was a substantial shift of institutional business on to the Cofunds platform. As a result it saw its gross flows rise to £4.6bn and net flows to £3.3bn. Without this significant contribution industry flows would have been more of a damp squib.”
The report found year-to-date sales remained buoyant and predicted that a flatter fourth quarter would not overly affect the outcome. Gross platform flows of £36bn and £22bn in 2011 were significantly ahead of like-for-like sales in 2010 of £23bn and £10bn respectively.
Adrian Murphy, associate partner of Ayrshire-based Murphy Financial, said: “I am not surprised that the ongoing sovereign debt crisis has impacted on assets under management on platforms.
“The turbulent markets have not only reduced the assets under management, inflows have slowed down as well. We have noticed the volume of new clients looking to invest has dropped off over the past quarter, as well as a reduction in funds under management.
“This is disappointing as, although things are a bit volatile at the moment, it is still a great time to invest for the medium to long term, rather than trying to time the markets further down the line.
“It would be nice to see some confidence return to the market in the run-up to Christmas and this trend reversed.”
