PlatformNov 16 2016

Platform sales plunge to lowest level since RDR

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Platform sales plunge to lowest level since RDR

Net sales on platforms plummeted to the lowest level seen since the Retail Distribution Review, as investors were wary of the UK’s uncertain economic outlook.

According to the Fundscape platform report, looking at the three months to the end of September, net sales plunged to £8.6bn, which is the lowest level seen since the first quarter of 2013.

Yet Aegon beat Hargreaves Lansdown to the top of the leader board after raking in sales of £1.6bn throughout the quarter, which Fundscape said was helped by the platform’s ongoing customer upgrade programme.

Bella Caridade-Ferreira, chief executive of Fundscape said: “The third quarter is usually the quietest because of summer holidays, but flows were even lower than expected.

“Stock markets were soaring, but the UK’s uncertain economic outlook made investors extremely cautious with their investments.”   

 In this hostile and volatile environment, further consolidation is to be expected and insurance companies are likely to lead the way.Bella Caridade-Ferreira

Despite the pessimistic sales picture, platform assets actually jumped by 9 per cent in the third quarter of this year, climbing to £469bn from £432bn.

Since the start of the year, UK platform industry assets have increased by 17 per cent, hitting £67bn.

TOP 5 PLATFORMS BY NET SALES 
IN Q316 (£m)
Aegon£1.6bn
Hargreaves Lansdown£1.1bn
Standard Life (inc Elevate)£1.0bn
Aviva£835m
Zurich£645m

This comes after the FTSE 100 and the FTSE All-Share indices rocketed by 6 per cent and 7 per cent following the EU referendum in later June.

Asset growth was strong across the board, with Standard Life’s assets surging by 46 per cent to £42.3bn as it completed its acquisition of Elevate.

Aegon, which hopes to complete its acquisition of Cofunds in the final quarter of this year, was also home to significant growth, increasing by more than a quarter over the three months.

It continued to transfer legacy accounts to the platform, resulting in assets jumping by more than a quarter to £11.2bn.

Ms Caridade-Ferreira said Brexit and the US election results mean a prolonged period of uncertainty and volatility is on the cards for the platform industry.

“We expect the precautionary motive to save, the low interest rate environment and pension freedoms to keep platforms broadly on the right track."

However, she said the business environment in 2018 will be tough and competition for business will be fierce.

“In this hostile and volatile environment, further consolidation is to be expected and insurance companies are likely to lead the way.”

katherine.denham@ft.com