Market Summary - Q4 2017
Total assets have grown 19.7% over the year from £170.9bn as at the end of 2016 to £204.6bn at the end of 2017. Importantly, a large amount of this increase came from stock market growth – across the same time-frame for example the FTSE 100 total return rose by 11.9%.
Over 3 million DIY investors
Customer numbers have increased and there are 3.9 million accounts in the DIY investment market. However, over 300,000 of those new accounts are from groups with workplace pension business – True Potential Investor and Aegon in particular. It’s getting harder to split workplace DC pension business from other online investing assets, and arguably less meaningful as workplace becomes just another customer acquisition channel.
Robo remains tiny
Robo advice remains embryonic today and accounts for just 0.9% of the total market, dominated by Nutmeg which holds £1.1 billion of the total £1.8 billion in robo today. (Moneyfarm and Scalabale Capital disclose total assets to us, including non-UK holdings. For market and robo totals we have estimated the UK share of their AUA.)
A more youthful audience!
Average ages are gradually coming down – it’s 49 years old today. The robo customer base is relatively young at an average age of 41, compared to the banks at 55. Platforms that have been around longer naturally have higher average ages.
Growth in ‘ready-made’ solutions
The shifting role of a platform towards fund picker, or even fund manager, continues. More platforms have launched their own multi-asset fund ranges, with into which we're seeing increasing flows. Charles Stanley was the most recent platform to launch a range of multi-asset funds in October 2017. Once you remove listed securities, robos' ETF portfolios and platforms' own multi-asset fund ranges, unless they're on a fund shortlist, the amount left for single-strategy fund managers is dwindling.
A number of asset managers have joined Fidelity in the direct-to-consumer market in recent years. Vanguard was the most hotly anticipated, launching in May 2017. Other groups now active include UBS and Investec (with robo-advice propositions) and Aberdeen, owner of Parmenion. M&G and Columbia Threadneedle also offer their own funds through an online ‘platform’ and Schroders has a stake in Nutmeg.
Banks are also re-entering the market, after retreating from branch-based advice post-RDR. They also appear to be focusing on offering advice as part of their online investment services. RBS/NatWest provides an automated personal recommendation for £10; and Lloyds, HSBC, Nationwide and Santander have all announced automated advice intentions.