Adviser platforms face 'challenging time' as outflows mount

Adviser platforms face 'challenging time' as outflows mount

Total assets under administration on advised platforms have grown 3 per cent in the third quarter of the year, but outflows continued to rise, analysis from the Lang Cat has shown. 

The total AUA figure, which covers 22 advised platforms, increased from £531.42bn at the end of the second quarter to almost £550bn at the end of Q3. 

Taking out assets from institutional, direct and other channels, the Lang Cat’s analysis showed advised retail assets increased by 4 per cent in the third quarter from £418.28bn to £433.42bn. 

Gross flows on the advised market were flat at £14.21bn. However, net flows on the advised channels fell by 1 per cent, from £5.21bn to £5.14bn, in the period.

Year-on-year, the reduction in net sales was even more significant, the Lang Cat found, with all channels down 39 per cent and the advised channel down 31 per cent.

Mark Polson, principal at the Lang Cat, said: “As is becoming the norm for the advised platform market, the headline AUA numbers don’t look too bad, but the sales figures tell a different story.

"Although advised gross flows are holding up fairly well, net flows continue to decrease at a faster rate, due to a mixture of increased withdrawals and a reduction in gross flows.

“Continued uncertainty over how Brexit will play out, the DB transfer slowdown and the reputational damage to the industry of the Woodford saga, have all contributed to a challenging time for the platform market, which looks set to continue into Q4 and beyond.”

Mr Polson said on an individual platform level there were “clear winners” and “obvious losers” when it came to inflows and outflows. 

He added: “Keeping advisers happy with consistent service, solid functionality and competitive pricing are increasingly important to winning and retaining new business in difficult market conditions.”

Martin Bamford, head of client education at Informed Choice, said: “The advised market has to face up to the demographic challenge of ageing investors and rising withdrawals.

“It’s no surprise to hear that gross sales are holding up but withdrawals are on the rise. Advisers need to expand into new markets to ensure continued asset growth.”