Adviser platforms delivered their second consecutive quarter of growth, rebounding from their losses in the tumultuous first quarter of 2020. Platform assets grew by 2.5% in the quarter to £554bn, despite falls in stock markets in the same period when the FTSE All-Share Index fell by 3.8%.

The bad news was that third quarter net flows (new money and transfers in less withdrawals and transfers out) were down by 20%.

The biggest impact was on net ISA flows which were down over 70% on the Q2 figure. This is a remarkable setback, even allowing for the normal seasonality of many investors buying their ISAs in the second quarter of the year following the start of the new tax year. In contrast with ISAs, pension net flows were stable.

Several platforms have posted net outflows from ISA wrappers in the most recent quarter. Clearly, in many cases, withdrawals are outweighing deposits – which doesn’t take a huge change in behaviour given the annual allowance limits on ISA deposits. An increasing number of advised clients may have been accessing their investments to help their personal cash flow during the COVID-19 pandemic.

More positive news for platforms has been the significant market recovery – so far – in the final quarter of 2020. Assuming this holds up until the end of the year, we expect to see considerable growth in the platform market – and critically in investor confidence – when we publish year-end data in our first report of 2021.