Platform flows plummet following third quarter slump

Things got exceptionally tough for the platform industry in the third quarter. The cost of living crisis, runaway inflation, uncertain economic outlook and political instability have had a huge negative impact on investor confidence. Investors were scared off, dumped risk en masse and retreated to the safety of cash. As a result, gross sales fell to £26bn, the lowest since the fourth quarter of 2016, while net sales fell to just £4.4bn – the lowest net sales in the industry for over a decade.

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Assets fell a more calm 1.5% to £825bn in the three months to September, less than the FTSE 100’s 3.8% decline. However, year-to-date the industry lost a total of £105 billion in assets, with an inevitable impact on platform revenue. Luckily, some platforms can augment their declining earnings with higher cuts due to rising interest rates and cash holdings on the platform.

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Apart from True Potential, all platforms suffered a marked drop in flows in the third quarter. True Potential was the big winner in the quarter, leading net sales across all channels and the advised platform thanks to its vertically integrated model and compelling consultancy offering. Quilter, also a vertically integrated platform, led the recommended platform gross sales for the quarter and year to date.

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Bella Caridade-Ferreira, CEO of Fundscape said“The cost of living crisis is a global phenomenon, but Trussonomics has caused a market crash and sent investors running for the hills and retreating to the safety of money. A new government and the next budget should, hopefully stabilize the situation.

“The long-term fundamentals of the UK retail wealth management sector remain strong. But with the UK in recession and likely to remain so for at least a year, it will be a bumpy ride for the platform industry as the world adjusts to a new normal of higher inflation and disposable income. weaker. Consumers will need a lot of support over the next two years. Vertically integrated platforms are adept at supporting both advisors and consumers – other platforms may need to pull a leaf from their books.

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