The latest IA figures revealed fund platforms’ gross retail sales totaled £8.3bn in January 2018, representing a notably lower market share of 36.7%, compared to 45.8% a year ago.
In contrast, the financial adviser distribution channel saw gross retail sales of £8.1bn with a market share of 35.7%, an increase from 27.4% in January 2017.
Alastair Wainwright, fund market specialist of the IA, described the change in fund platforms’ dominance as a “slow but steady reduction”.
He said: “A number of factors may be driving this shift such as non-advised investors turning to financial advisers or advisers moving off platforms and investing directly with fund managers.”
However, Adrian Lowcock, investment director at Architas, warned against jumping to conclusions.
“Investors using advisers and those doing it themselves on a platform can behave very differently from one another, so it could be just a case that adviser led investors are more likely to do their ISA contributions early, whereas execution only investors can be more variable so react to market conditions and postpone their ISA investments.
“Technology will make it easier for some investors to go direct to some fund groups but again this is still marginal.”
Founder of financial services consultancy The Lang Cat’s Mark Polson has previously criticised platforms for becoming opaque and overly complex.
In February, Polson said: “It is now in line to be disrupted as it was the disruptor itself. The life companies had a century of dominance, the platforms had 15-20 years.
“We like to say that platforms are dead.”
Fixed income takes the lead
Meanwhile, the IA data also revealed fixed income funds continue to top the bestselling list with £1.6bn net retail inflows, followed by £977m into equity and £941m into mixed asset.
Despite the risk of a rate hike, the Sterling Strategic Bond sector was the overall bestseller and attracted £808m. Wainwright said this was because these bond funds do not necessarily take on UK interest rate risk as they are able to invest globally while hedging currency exposure.
The Global sector followed with £675m of net retail sales, making it the bestselling equity sector in January as investors seek geographic diversification.
However, investors continue to shun UK funds, which suffered outflows of £532m over the month.
Net retail sales for passive funds were £861m, with passive equity funds producing net retail sales of £533 million.
