As 2024 draws to a close, the £2.4tn UK retail investing market looks busier than ever: existing trends continue to play out and new regulatory, legislative and economic factors are layered on top.
Total UK retail assets were 9.3% higher than last year – D2C leading the charge – but most of this growth was due to investment performance. Investment flows are still being sapped by inflation and higher interest rates.
Increasing overlaps between different segments of the market are making investment distribution more complex; and hybrid portfolios combining in-house funds, sub-advisory and MPS are emerging, blurring the lines between retail and institutional for asset managers.
Investment distribution continues to polarise into investment solutions and portfolio components. D2C services are simplifying their offerings to attract novice investors, while advisers increasingly outsource portfolio management. Those selecting solutions are prioritising cost, encouraging those building solutions to favour passive funds.
Market participants are also facing seismic changes to taxation under the new government. Advisers and wealth managers will need to reacquaint themselves with trust-based planning and life assurance bonds, while life companies look set to benefit.
Significant growth opportunities are out there. Workplace DC assets are rising faster than retail investment assets thanks to auto-enrolment. Redrawing the advice-guidance boundary may help to bring some of these investors into the arms of retail providers, while pension dashboards should provide additional impetus and means for better engagement.
All of this and more are covered in our UK Fund Distribution: Annual Review. Get in touch for more information