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Mixed results in Q2 for advised platform market, says the lang cat

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Data from financial services consultancy, the lang cat, finds total assets under administration (AUA) on advised platforms increased by 4.36 per cent in the second quarter, up to GBP531.42 billion from GBP509.21 at the end of Q1. 

During the same period the MSCI World Index grew around 2.8 per cent and the FTSE 100 grew 1.7 per cent.
 
Stripping out assets from institutional, direct and other channels to market, the lang cat analysis finds that advised assets under management grew by 4.46 per cent in Q2, increasing to GBP418.35 billion compared to GBP400.47 billion in Q1.
 
Gross flows also increased, rising by 11.96 per cent for all channels to GBP23.71 billion in Q2 from GBP21.18 billion in Q1, and 2.93 per cent for the advised market to GBP14.21 billion from GBP13.81. However net flows were down, with a reduction of 13.33 per cent for all channels, to GBP4.98 billion in Q2 from GBP5.75 billion in Q1, and a fall of 1.76 per cent for the advised channel, to GBP5.22 billion from GBP5.32 billion. Year on year, the reduction in net sales are even more significant, with all channels down 56.23 per cent Q2 2019 compared to Q2 2018 and the advised channel down 44.76 per cent.
 
Mark Polson, Principal of the lang cat, says: “All in all, Q2 has been a mixed bag for the advised platform market. The headline AUA 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 DB transfers compared to recent years, we should perhaps be encouraged that inflows are holding up so well.
 
“However, delving a bit deeper, there’s a fair bit of 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. Just looking at the providers who’ve announced publicly, AJ Bell took net inflows in its advised channel of GBP700m on an opening AUA position of GBP30.9 billion – 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 GBP111m on an opening position of GBP14.75 billion – 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 (yes, that old chestnut) 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.”

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