Economic uncertainty has weighed on platform sales, with gross sales in the third quarter dropping to their lowest level in two years, according to the Fundscape Platform report.
In Q3 gross sales fell to £21bn, the lowest level since Q3 2014, while net sales plummeted to £8.6bn, the lowest volume of sales since RDR came into effect in at the start of 2013, despite the FTSE 100 and the FTSE All Share shooting up 6 per cent and 7 per cent respectively in Q3.
Bella Caridade-Ferreira, CEO of Fundscape, says “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.”
Aegon, which is in the process of acquiring Cofunds, was the strongest platform by net sales in Q3, knocking Hargreaves Lansdown from the top of the leader board, although the report highlights that “only £300m of Aegon’s £1.6bn sales is attributable to net new flows, so platform industry net sales were actually lower (£7.3bn) and therefore particularly sluggish”.
Meanwhile assets held on platforms jumped 9 per cent following Brexit, the report found.
In the period between the referendum and the end of September, platform assets rose from £432bn to £469bn, while assets increased by 17 per cent or £67bn since the start of the year.
Standard Life stood out due to its acquisition of Elevate, which saw its assets increase by 46 per cent, although with Elevate’s assets stripped out, growth stood at 5 per cent. Aegon saw a 26 per cent jump in assets to £11.2bn as it continues to transfer legacy accounts to the platform.
Pension business represented 73 per cent of net sales, with £6.3bn invested through pension vehicles.
Caridade-Ferreira adds: “A prolonged period of uncertainty and volatility as a result of Brexit and the US election results 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, 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.”