In their latest analysis released this morning, Fundscape have revealed the extent of the fall off in platform sales over Q2 of 2023 as the cost of living crisis and market uncertainty take their toll.
We’re sharing the full details of Fundscape’s latest announcement below:
As the tax-year-end approached, platform activity warmed up and there were high hopes that the momentum would carry through into the second quarter and beyond. Unfortunately, that was not the case. The second quarter of the year spectacularly failed to deliver on the sales front, but stock-market performance gave platform assets a reprieve (and therefore revenues). The FTSE All-World Index was up 3.2% for the quarter, although the FTSE 100 fell by 1.3%. As a result, platform assets were back over the £900bn1 mark for the first time since the fourth quarter of 2021 (when we were still feeling optimistic about the future).
Sales, however, were a bloodbath. Gross sales rose to £34bn but net sales plummeted to just £5.5bn, despite the quarter capturing the tail end of the ISA season, taking the net-to-gross ratio to just 16%. Not only was it the worst second quarter since 2010, but also flows are also down by an average of 48% against every second quarter of the last 10 years.
Adviser platform business was also much weaker in the second quarter. Gross sales were a respectable £16bn but net flows were the lowest net sales total since Q411. All advised platforms were home to a downturn in gross and net flows while a small number registered a second quarter of net outflows. One reason for this has been the industry’s focus on the implementation of Consumer Duty, which has inevitably led to less time with clients.
Bella Caridade-Ferreira, CEO of Fundscape said, ‘The cost-of-living crisis, competition from cash, consumer morale, and the Consumer Duty have wreaked chaos on the platform industry in 2023. No platform has been spared from the downturn in business.
‘Inflation easing for the year to July was welcome news, but it also increased the likelihood of further interest rate rises with a knock-on effect on the cost of living and disposable incomes. The investment industry has faced significant headwinds over the past nine months and we don’t expect the outlook to improve until the first half of 2024 at the earliest. Platforms need to batten down the hatches and ride out the storm.’