Platforms hit by volatile markets and low Isa sales

Platforms hit by volatile markets and low Isa sales

Gross platform sales in the first quarter totalled £21.2bn, marginally more than sales in the final quarter of 2015 but down 7 per cent on the same period last year.

The latest Fundscape Platform Report revealed despite volatile markets and stock market growth of 1 per cent in the first three months of the year, platform assets under administration rose by 3 per cent - or £13bn - to £415bn.

But with China concerns and Brexit fears, the net sales on platforms total slipped below £10bn (£9.4bn) for the first time since the third quarter of 2014.

The research - which covers 19 platforms and an estimated at 98 per cent of the market - showed just three platforms (Cofunds, Fidelity and Hargreaves Lansdown) have assets of more than £60bn.

Top platforms by assets in Q1 2016 (£m)
Cofunds (estimated)£80.0bn
Hargreaves Lansdown (estimated)£60.0bn
Old Mutual£36.6bn

Between them, they account for just under half of total industry assets and this size guarantees them a place in the gross sales table.

For timing reasons, Hargreaves Lansdown and Cofunds report their figures a quarter in arrears, so data is estimated from the previous quarter’s data and historical trends.

However, being ‘weighty’ is not a factor in the net sales table, where smaller platforms dominate, according to Fundscape.

Top platforms by net sales in Q1 2016 (£m)

Hargreaves Lansdown £1.2bn
Standard Life£1.1bn

Standard Life was second overall, with an “impressive rate” of growth, thanks to working closely with advisers, combined with being able to leverage different parts of the value chain. More growth is on the cards with the acquisition of the Axa Elevate wrap, added the report.

Also in the news recently was Aegon - after acquiring BlackRock’s DC business for its ARC platform - which Fundscape said had strong net sales partly due to the transfer of existing business onto the wrap.

Fundscape chief executive Bella Caridade-Ferreira commented that although the first quarter is traditionally the start of the Isa season, pension flows were four times stronger than Isa activity, continuing last year’s trend.

Gross Isa sales were down by 15 per cent and net by 40 per cent compared to the same quarter in 2015. In contrast, pension business maintained momentum with net flows up on the previous quarter and the same quarter in 2015.

“Isa activity is likely to improve modestly in the second quarter, but concerns around Brexit will suppress demand,” said Ms Caridade-Ferreira. “Investment activity is likely to be muted until the second half of the year and even longer if the UK votes for a Brexit.”

Graeme Mitchell, managing director at Galashiels-based Lowland Financial, suggested parallels with the Scottish Referendum, when investors were generally wary of any uncertainty and held off making decisions.

“From an investment point of view, I think the grey vote (those with pensions and Isas) made a huge difference the Scottish Referendum, with a significant majority backing the status quo, so I suspect the EU vote could be similarly impacted.