Statistics from the consultancy showed sales across all channels were down by 5.3% on Q1 2022 to total £27.9bn. Net sales were down 21.2% compared to Q1, totalling £8.9bn. Outflows increased marginally to £18.9bn, it added.
The lang cat said advised platforms “showed resilience in the face of the economic headwinds” with gross sales of £19.38bn, down 8.4% on the previous quarter, while net sales came in at £8.9bn, down 11.6%.
It said: “Though a large deal for Multrees paints a slightly better picture (and slightly skews the firm-level data) advisers were pragmatic with their client books, ensuring ISA and pension subscriptions were taken up where possible.”
Source: lang cat
Rich Mayor, senior analyst at the lang cat, explained: “As we expected after last quarter, advisers have been pragmatic in ensuring this year’s subscriptions are utilised in Q2 2022. Sales were muted but still comfortably above pre-pandemic levels. Advisers we’ve spoken with are spending much more time reassuring their existing clients and tweaking financial plans to tackle the deteriorating economic state of the UK.
“We know advice is often a provision of the wealthy, but even the well-off will feel the pinch of inflation and the grim predictions on energy cap rises in October and January next year. It is hard to see any way to avoid a recession, certainly if things stay on the same course.”
He added: “While sales have been resilient, assets have dropped substantially. Across all channels we have seen £66.9bn wiped off the platform market since the end of a bumper 2021, and it’s not very often we write that assets are down year-on-year.
“That in turn affects platforms’ profitability in terms of revenue from charges on assets, which knocks on to shareholder returns. Platforms will be putting their arms round their biggest supporters to try to protect revenue streams.
“If the trend continues for an extended period, which will certainly be the case if we cannot swerve a recession, we will see platforms moving into markets they have not been in before to help alleviate the pressure.
“This quarter is likely to be the last time we see these sorts of relatively good sales numbers for a long time to come.”
The latest statistics from Fundscape painted a similarly gloomy picture.
It said, for Q2, all platform assets stood at £838.4bn. Quarterly asset growth was down by 5.9% to £52.2bn while gross sales were £31.1bn, net sales were £8.5bn and the net/gross ratio was 27.2%.
Fundscape said at this point last year the world was moving on from the Covid pandemic and there was a sense of optimism about the future. However, it said this had been replaced by a “sense of despair and the worst economic and geopolitical challenges in a generation – rampant inflation, the cost-of-living crisis, and the war on Ukraine”.
Fundscape said it was unsurprising that platform assets shrank by about 6% as the FTSE All Share was down by a similar amount.
It added that flows painted a “bleaker picture”.
“Investor confidence has plummeted, and gross and net flows fell to their lowest point since the Q3 2020 lockdown period, exacerbated in particular by a drop in ISA flows.”
It added adviser platform business was stronger overall. Two vertically integrated platforms – Quilter and True Potential – topped the leaderboards, highlighting their ability to closely support and work with their advisers and investors in difficult market conditions, according to Fundscape.
Bella Caridade-Ferreira, CEO of Fundscape, said: “The economic outlook is shaky at best, with little prospect of improvement in the short to medium term. With rampant inflation and fuel prices at unsustainable levels, investor confidence and disposable income will shrink to fresh lows.
“Investors and platforms will have to learn to live with the new normal. For platforms, the downturn comes just as they face another huge regulatory hurdle in the shape of Consumer Duty.
“The platforms that survive will be adept at adapting to disruption and diversifying into multi-channel businesses. Consumers will need significant support over the next few years and will expect their finances to be both digital and seamless across a range of products and services.”