Platform assets to nearly triple in five years

After hitting £560bn in the third quarter of 2017, Fundscape forecasts that assets held on fund platforms could surge to £1.4trn by 2022.

Despite flat stockmarkets and muted Isa activity, platform assets increased by £19bn (3.6%) in the third quarter thanks largely to strong net flows from pensions.

Indeed, according to Fundscape gross and net sales actually fell in the quarter to £30bn and £13bn respectively, but it said these sales remain high by historical standards. This is demonstrated by the fact that year-to-date gross and net sales of £93bn and £42bn are some 38% and 50% higher than like-for-like sales in 2016.

Bella Caridade-Ferreira, chief executive of Fundscape, said: “Isa activity was less pronounced in the third quarter but pensions picked up the slack, generating around 70% of platforms’ net flows.”

This, said Caridade-Ferreira, was owing to a combination of people taking advantage of their pension freedom rights and a steady pipeline of defined benefit transfers.

Accounting for 65% of industry net sales in 2017, Fundscape added this pension factor is expected to stay strong for a number of years to the benefit of the retail adviser channel.

“Despite Brexit and the regulatory headwinds facing the industry in the next few years, the platform industry is the de facto conduit for pension and investment solutions,” said Caridade-Ferreira. “As a result, platform growth is likely to continue in the same vein in the medium term. We expect platforms to evolve considerably as delivery and investment solutions become more tightly integrated.

“Taking into account various regulatory, political and economic factors, our realistic five-year projection is for platform assets to reach £1.4trn by 2022.”

At present three platforms account for 45% of the industry’s assets, with the largest being Cofunds which at the end of the third quarter had seen its assets hit £90.5bn.

In second place, with assets of £82bn was Hargreaves Lansdown, which according to Fundscape has enjoyed the largest asset growth in 2017 after its assets grew £12bn (17.3%). Fidelity, with assets of £76.9bn, rounds up the top three players.

 

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