More money was taken out of platforms in 2023 than in any other year as outflows continued to hit record highs each quarter, new research from the Lang Cat reveals.
Outflows last year hit £53.18bn – an increase of over a third on 2022’s total of £39.01bn.
In the fourth quarter of 2023 alone, outflows stood at £14.89bn.
Withdrawals from Isas and pensions from platforms took a hammering throughout the year, with outflows achieving new heights every quarter.
The primary reason investors gave for withdrawing was supporting themselves and family members with the increase in household expenses.
This was followed by concerns over capital preservation in volatile markets.
Despite the overall negative picture, advised platform assets and gross sales did show signs of improvement in the final quarter of 2023.
Assets under management for advised platforms (21 in total) increased by 5.34% in the final three months of the year to total £575.14bn.
The optimism from falls in inflation and hope that we might have seen the peak in interest rate increases also boosted new flows onto platforms.
Gross advised sales figures of £16.06bn are up by 1.94% on the previous quarter and up 16.57% vs Q4 2022.
The Lang Cat senior analyst Rich Mayor said: “The last quarter of 2023 rounds off the dominant theme of rising outflows hammering net sales in the advised platform market.
“Gross sales have been steady throughout, but the wider economic conditions mean more money has been taken out of platforms in 2023 than in any other year, with Isas and pensions bearing the brunt of it.
“We’ve tracked the reasons for the increase in outflows with advisers in both qualitative and quantitative exercises throughout the year, but our largest exercise for State of the Advice Nation was in field during Q4 too.
“The results show that the cost-of-living crisis meant financial plans had to be adjusted for a good portion of clients.
“The main reasons cited were investors supporting themselves and family members with the increase in household expenses, followed by concerns over capital preservation in volatile markets.
“On the latter point, we’ve also noted a shift in advisers’ retirement income strategies, with an increase in the use of annuities for more risk-averse clients.”
Now in its sixth year, the Lang Cat’s deep dive into the advice profession, State of the Advice Nation, is due for publication later this week.
