2022 was a tough year for platforms and the final quarter of the year was no exception.
Investor sentiment has been battered by a seemingly endless succession of bad news including the squeeze on living standards brought on by inflation, higher taxes, energy prices and the war in Ukraine. All this means customers and new flows are hard to come by and business levels are down. Stock market volatility meant most platforms closed the year with lower assets than they started with.
Disruption pays off
When the going gets tough, it helps to have a multi-channel platform business. As a result, the Aegon and Fidelity platforms, which support adviser, workplace and D2C propositions, wrote the most business in the final quarter and 2022 as a whole.
Only one platform, True Potential, was able to record over £1bn in net flow in the fourth quarter, illustrating just how difficult market conditions were. The figure was slightly down on True Potential’s quarterly run rate for 2022 as it wrote an impressive £5.1bn net for the year. The remarkably consistent AJ Bell was the only firm to top this with net sales of £5.2bn.
A benefit of vertical integration is the ability to work closely with advisers and clients, especially during difficult market conditions. It’s no surprise, therefore, that Quilter and True Potential topped the adviser platform tables for the fourth quarter and the year. True Potential’s buyout programme for retiring advisers helped push sales to new heights. Transact was in second place for gross and net sales across the board except for full year net sales where it was just edged out by Aviva, proving that independent, service-led propositions are highly valued by independent financial advisers.
Bella Caridade-Ferreira, CEO of Fundscape, said, ‘2023 will be a tough year for platforms. The ISA season always sets the tone for the platform industry for the year, and we suspect it will be lacklustre. Higher inflation, interest rates and taxes mean disposable income will be squeezed. The ability to save and invest, never mind the willingness to do so, will be affected. Cautious investors who can still afford to save and invest will undoubtedly be attracted by better interest rates on cash and deposits —despite the impact of inflation on their cash balances.
‘Having said that, the market is underpinned by strong structural drivers, so the longer-term picture is healthy. But the short-term picture is less rosy. Investor sentiment will be a big factor. 2023 and potentially the first half of 2024, will be difficult. We expect a 12-18-month time-lag as savers and investors adjust to a new normal. After that, life should start to return to normal, investors to adapt, and risk to return to the table again.‘