Advised platform assets grow 4.5%

Advised platform assets grow 4.5%

Advised platform assets under administration in the UK grew 4.46 per cent in the second quarter of the year, but netflows have shrunk.

According to data from the Lang Cat, assets reached £418.4bn at the end of June compared with £400.5bn at the end of the previous quarter.

Overall, assets on advised platforms – including institutional, direct and other channels to market - increased by 4.36 per cent in the quarter, from £509.2bn at the end of March to £531.4bn in June.

During the same period the MSCI World Index grew around 2.8 per cent and the FTSE 100 increased by 1.7 per cent. 

However, the Lang Cat’s analysis shows that while gross inflows increased 2.93 per cent in the advised market to £14.2bn, net flows were down 1.76 per cent in the quarter, from £5.3bn to £5.2bn, meaning the difference between money being put in and taken out has shrunk.

The consultancy’s analysis showed that year on year, the reduction in net sales was even more significant, with all channels down 56.23 per cent at the end of June 2019, when compared with the same period in 2018, and a decrease in the advised channel of 44.76 per cent.

According to Mark Polson, principal of the Lang Cat, the second quarter was a mixed bag for the advised platform market.

He said: “The headline assets under administration numbers aren’t bad and although the net sales figures look disappointing, we expect to see a drop in Q2 due to the Q1 tax year end spike.

“Against the backdrop of Brexit and investor uncertainty, as well as the substantial fall in defined benefit transfers compared to recent years, we should perhaps be encouraged that inflows are holding up so well.”

Nevertheless, Mr Polson noted variability between platforms, so while some have enjoyed strong sales this quarter, others have experienced more lacklustre inflows and a few have seen big outflows.

He added: “Just looking at the providers who’ve announced publicly, AJ Bell took net inflows in its advised channel of £700m on an opening assets under administration position of £30.9bn – a 2.26 per cent increase (which goes up to just over 6 per cent when you include market and other movements) – while Nucleus, took net flows of £111m on an opening position of £14.75bn – a 0.75 per cent bump that rises to 3.9 per cent when you include market movements.”

“Looking ahead, we could see greater market disruption as Prod segmentation and the use of multiple platforms may mean advisers start to look for new homes for client assets in larger numbers.

"There’s also the potential for further disturbance through corporate activity in the platform sector and the ever-present shadow of technology change.” 

The Prod rules, which came to effect last January, are aimed at making sure advisers are offering their clients suitable solutions, by requiring product manufacturers and distributors such as advisers to identify target markets.