The financial advisory world is buzzing with the latest data: outflows from advised platforms have now risen for an eighth consecutive quarter. Cue the usual suspects—cost of living pressures, paying off mortgages, helping out the kids. All very reasonable explanations, and certainly convenient. But let’s not kid ourselves. There's more to this story than just interest rates and household budgeting.
Let’s dig into the numbers. According to the Lang Cat's latest platform data, we saw a £15.77bn exodus in the second quarter of 2024, a 30% increase compared to last year. Sure, gross sales are still holding strong, but it’s hard to ignore that this is the eighth quarter in a row of rising outflows. Advisers are scrambling to point the finger at rising interest rates and clients choosing cash over investments, but perhaps there’s a more uncomfortable truth lurking behind these numbers.
Could it be that clients are finally wising up? The days of the middleman might just be numbered. With the commoditsation of retail investment products, clients are increasingly asking themselves why they need an adviser in the first place. In a world where robo-advisors, DIY platforms, and subscription-based financial planning services are on the rise, the old model of delegating your financial future to someone else is starting to look a bit, well, outdated.
And let’s not forget the elephant in the room: adviser consolidation. The industry has been experiencing a surge in M&A activity, with smaller firms selling out to larger ones at an alarming rate. The result? A lot of disgruntled clients being shuffled around like pawns on a chessboard, only to find that the new owners aren’t exactly jumping at the chance to provide the same level of service. When your assets fall below the raised thresholds, you might find yourself politely shown the door. Consumer Duty regulations, anyone?
The holistic financial planning community, who’ve wisely stepped away from the traditional adviser model, are reporting an influx of these disillusioned clients. These are people who’ve been burned by the big boys and are now seeking out a more empowering, subscription-based approach to financial planning. They want to take back control and are realising they don’t need to fork over a chunk of their hard-earned cash to someone else to do it.
So, while advisers might like to blame the usual suspects for the outflows, perhaps the real reason is that their clients are finally waking up to the fact that they don’t need an adviser to navigate a commoditised investment market. In the end, maybe it’s not just about covering living expenses—it’s about moving from delegation to empowerment. And that, my friends, might just be the future of financial planning.
Addendum: Platform Assets Surge Past £1 Trillion Amid Booming Stock Market
In the ever-evolving landscape of financial planning, it’s important to stay informed about the latest shifts and trends that impact both advisers and clients alike. Recent data from Fundscape reveals a significant rebound in platform assets, driven by a buoyant stock market. This is a development worth noting for anyone navigating their financial future, whether you're an adviser or someone taking control of your own financial planning.
As of the second quarter of 2024, total platform assets have risen to a remarkable £1.1 trillion, marking a £47 billion increase from the previous quarter and a substantial £136 billion surge since the start of the year. For those keeping a close eye on market movements, this uptick has been fueled by strong performances in the FTSE All World and S&P 500 indices, which have risen by 10% and 14.5%, respectively, since January.
This growth has been largely attributed to the excitement surrounding new technologies and innovations, such as artificial intelligence and cutting-edge weight-loss drugs, which have captivated investors and driven valuations sky-high. For those on advised platforms, there was also positive news, with assets growing by £3.3 billion in the second quarter alone.
However, it’s not all smooth sailing. Despite gross flows reaching an impressive £40.7 billion—the best since late 2021—net flows tell a more cautious story. While net flows increased by 11.4% to £7.8 billion, they still lag behind gross flows, reflecting ongoing challenges such as the allure of cash and annuities, and the pressures of higher living costs.
Advisers are also feeling the impact of the new Consumer Duty regulations, which has slowed down some activity as they adjust to these changes. Notably, despite these challenges, platforms like Quilter, Aviva, and Transact continue to perform strongly, underlining their solid reputation and continued commitment to delivering value for advisers and their clients.
So, what does this mean for you? Whether you're working with an adviser or taking the reins yourself, these shifts highlight the importance of staying adaptable and informed. As the market continues to evolve, opportunities abound—but so do challenges. Now more than ever, it's crucial to have a clear, well-informed plan that can navigate both the highs and the lows.
At the Academy of Life Planning, we're here to help you stay ahead of the curve. Whether you're looking to empower yourself with the knowledge to manage your own finances or seeking guidance through more traditional avenues of adviseed channels, our holistic approach ensures you have the tools and support you need to thrive.
Let’s keep moving forward together, with clarity, confidence, and a commitment to building a secure and fulfilling financial future.
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