Market Summary - Q1 2018
Total market assets have grown 14.2% over the year from £183.0bn as at the end of Q1 2017 to £209.1bn at the end of Q1 2018. This compares to a 0.2% growth in the FTSE 100 over the same period. Markets fell in the first 3 months of 2018 during which the FTSE 100 alone fell by over 7%.
Increased consolidation amongst investors
Average balances across the market fell to £47,800 due to higher customers in the market with smaller portfolios. However, amongst the traditional larger platforms we have seen an increase in average balances, suggesting increased consolidation amongst investors during the favourable market conditions in 2017. This has contributed to the increase in AUA we have seen despite low or static growth in markets.
Customer accounts break the 4 million mark
Customer accounts have increased above 4 million for the first time and now stand at over 4.4 million accounts, contributing to AUA market growth. However circa 400,000 of these new accounts are from groups moving their workplace pension customers onto their D2C books – such as True Potential Investor and Aegon in particular.
Robo advisers saw strong growth in customer numbers over the 12 months to Q1 2018 and there was increased activity from Banks within the retail investment market. Smaller increases in customer numbers are being seen across the rest of the market, and a large proportion of this was customers with lower balances.
Growth in Robo advice
Robo advice continues to grow, but remains very small in comparison to the overall market with a market share of just 1.%, growing from 0.7% at the end of Q1 2017. Customer numbers continue to grow and have increased around 270% in the 12 months to Q1 2018, however most customers have significantly smaller portfolios that the market average. With more robos now offering pensions, it will be interesting to see how this will impact the growth of robo advice.
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, into which we're seeing increasing flows. Charles Stanley Direct launched a range of multi-asset funds in October 2017, and Hargreaves Lansdown launched their Simply Invest fund in April 2018. 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 more youthful audience!
Average ages are gradually coming down – it’s 48 years old today. The robo customer base is relatively young at an average age of 40, compared to the banks at 55. Platforms that have been around longer naturally have higher average ages.
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 online ‘platforms’. Schroders has a stake in Nutmeg, and BlackRock has a stake in Scalable Capital. March 2018 saw Aberdeen Standard Investments take a stake in Virgin Money and April saw rumours of an imminent robo launch from Invesco.
Over the last 12 months we have seen increased activity from Banks in the retail investment market, with a movement towards automated advice propositions. RBS/NatWest provides an automated personal recommendation for £10; and Lloyds, HSBC, Nationwide and Santander have all announced automated advice intentions. Over the period we saw double digit percentage growth in customer investment accounts within banks.