Just when financial professionals thought that lack of sunscreen or the Ashley Madison hack were their biggest worries, the world’s financial markets have been thrown into turmoil. Economic woes in China, fragility in America and uncertainty in Europe may well drive investors out of funds – which spells bad news for the investment industry.
Despite the weak markets, we are confident that the adviser platform market will continue to grow at a healthy rate in the double digits. After all, Q1 was strong, with AUA up 8%. In our Q2 report that is released today, we highlight that the adviser platform market grew by a modest 1%.
In the news this week, AXA has put its UK business up for sale. AXA has had a good first half (after a shaky 2014). Assets are up, the platform is growing more quickly than the competition and adviser reviews are up. But with Cofunds and AXA Wealth Elevate on the block and Transact only recently taken off the market, we wonder if we’ve reached the tipping point toward consolidation.
It is not easy for advisers to transfer assets off platform and uncertainty over ownership wouldn’t lead anyone to leave. They may think twice about where to place new business – we will watch sales figures closely for AXA and Cofunds.
On the topic of transferring assets, one-in-three advisers do tell us that they are transferring assets from at least one platform. Half of these are planning to move assets from Cofunds. Even before the possible sale was announced, Cofunds struggled more than others to hold on to legacy assets. When we fielded our survey in late June/early July news had only just broken about a potential sale. The added uncertainty over ownership won’t help matters.
In other news, Zurich and Standard Life each added over £1bn in net sales for the quarter – indeed, it was the second consecutive quarter with net sales over £1bn for Standard Life. Other standouts were AJ Bell Investcentre, Aviva and Aegon, Among smaller players, Novia, Parmenion and Alliance Trust Savings all enjoyed above average AUA growth.
As the week draws to a close, the US markets have made a sharp recovery, China’s markets recovered a tad and the relief is spreading to Europe. There’s less need for sunscreen in Blighty and fewer Ashley Madison distractions. Still, let’s hope the good news continues.