The first half of 2020 has had a great impact on everyone’s lives, and financial advisers and platforms have not been immune to much of the disruption. We can shed some light as to the state of the market, now that we have adviser platform data for the second quarter of 2020.
Total adviser platform assets in the second quarter of 2020 rebounded by 13% to £541bn. This represents a 5% increase in the 12-month period to the end of June 2020. Adviser portfolios are diversified into bonds and other asset classes, so they performed better than the FTSE All Share index over the quarter, which rose by just under 10% but had fallen by 16% in the year to 30 June 2020.
The pandemic did hit gross flows – i.e. the total amount of new money and transfers coming onto platforms. These were down on the first quarter of the year and also the corresponding quarter of 2019. However, net flows were only marginally down on Q1 2020, but actually up from the levels recorded in Q2 2019.
But the figures don’t show the whole picture. The nation went into lockdown on 23 March right at the end of Q1 and just over a week before the end of the tax year. Many adviser firms would have already had business in train or in the pipeline to tide them over into April.
Many platforms have told us that their tax year end wasn’t affected, but that they had seen a slowdown in flows in April and May. Crucially, though, many reported a slowdown in positive outflows, that is money being withdrawn from platforms as cash/income in the same period. What’s more, new business levels had almost returned to normal – or in fact better – levels than the previous year in June.
Adviser platforms have mostly ridden the wave of Covid-19 and look set to emerge from the other side in a stronger position – both in terms of asset levels and making their services more efficient and user-friendly for advisers in the long run.
We will soon be publishing our next UK Adviser Platforms report, focusing on how financial advisers select platforms and conduct due diligence, as well as all the platform data from Q2 2020. Get in touch for more details.