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Cofunds on top: 7 lessons from Fundscape platform report

Seven lessons from Fundscape's latest platform update, covering the third quarter of the year.

Platform research firm Fundscape has published its latest quarterly report uncovering the state of the platform market.

Read on to see seven of the lessons Fundscape has identified.

Platform research firm Fundscape has published its latest quarterly report uncovering the state of the platform market.

Read on to see seven of the lessons Fundscape has identified.

Pension heritage is a bonus for platforms

According to Fundscape the platforms with a strong pension heritage 'performed particularly well'.

Aegon came out on top in the data provided, topping the net sales chart for the three month period between July and August with £1.9 billion. 

The acquisition of Cofunds also continued to provide good news for Aegon. The platform topped the gross sales charts over the same period with £5.3 billion. 

Converting non-platform assets inflates figures

However, one point noted by Fundscape is that once you strip out 'conversions' of clients who were moved onto the platform for the first time then Aegon dropped in the charts. 

According to the data, £752 million of net sales in the third quarter of this year came from such movements in clients. 

Once this is done Standard Life comes out on top of the net sales chart with £1.7 billion. 

Acqusitions are benefitting providers

Readers may have noticed that both Aegon and Standard Life made acquisitions in the last year, and some of the benefits of scale are shown in the Fundscape data. 

Cofunds, which was bought by Aegon last year, now has more than £90 billion in assets under administration. With Aegon Retirement Choices added, Aegon now has more than £100 billion in platform assets. 

Meanwhile Standard Life now has more than £50 billion of assets under administration including Elevate, which it bought from AXA last year.

The top five platforms in terms of assets were:

  • Cofunds - £90 billion
  • Hargreaves Lansdown - £82 billion
  • Fidelity - £77 billion
  • Standard Life (including Elevate) - £51 billion
  • Old Mutual Wealth - £49 billion

Pensions business is booming for platforms

As most would expect, platforms are benefitting from pensions. 

In the third quarter of the year Sipps and related pension investments accounted for 68% of net sales, or £9 billion of the £13.2 billion net sales recorded in the period. 

'This was due to a combination of people taking advantage of their pension freedom rights and a steady pipeline of defined benefit transfers,' Fundscape said. 

'The pension factor is expected to remain strong for a number of years. Demand for pension advice and a glide path that goes beyond retirement means the retail adviser channel will benefit the most from this trend. In 2017, it accounts for 65% of industry net sales.'

 

Platforms could have £1.4 trillion in five years

Fundscape also made some predictions about the future of the platform market based on the report. 

Bella Caridade-Ferreira (pictured), chief executive of Fundscape, said: '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. 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 £1.4 trillion by 2022'

DIY is in demand (with one firm)

The data collected by Fundscape also incorporated direct to consumer platforms. 

This showed that there is plenty of demand for DIY investing, as Hargreaves Lansdown recorded the highest asset growth. 

It has increased assets by £12 billion so far this year, more than any other platform. Its platform has now hit £82 billion. 

However, Hargreaves Lansdown was the only direct to consumer platform provider to appear on the top five list. 

 

 

Advised clients are still putting more on platforms

Hargreaves Lansdown may have topped asset growth charts, but by and large most clients are investing through advisers. 

Retail advised clients make up 59% of platform assets, with £332 billion of the £559 billion held on all platforms. By comparison direct to consumer assets are worth £119 billion, with corporate and institutional assets worth the remaining £108 billion.

In terms of gross sales advised clients made up 58% in the three months between July and September, worth £17.1 billion. 

 

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