Market Summary - Q2 2018
Total market assets have grown 15.3% over the year from £189bn as at the end of Q2 2017 to £218bn at the end of Q2 2018. This compares to an 8.7% growth in the FTSE 100 over the same period.
Customer accounts continue to rise
Customer accounts broke the 4 million mark at the start of this year, and have continued to rise since, and now sit at 4.5 million. 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.
Over the last 12 months we have seen double digit growth across multiple providers, from the newer robo advisers to the traditional platforms. As a group, robo advisers saw triple digit growth in customers in the 12 months to the end of Q2 18.
Robo advice adoption continues
The adoption of robo advice shows no sign of slowing down, with assets increasing by over 80% over the last 12 months – customer numbers have seen triple digit percentage growth over the same period. Market share is increasing but very marginally, with a total market share of 1.2% at the end of Q2 18, this is up from 0.75% 12 months ago.
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.
Growth in ‘ready-made’ solutions
We have seen an increased adoption of ready made portfolios across platforms as investors seek guidance in choosing investments. Since the beginning of 2017 AJ Bell Youinvest, Barclays Smart Investor, Charles Stanley Direct, and Chelsea Financial services have all launched own-brand funds. Hargreaves Lansdown also launched their Simply Invest fund in April 2018. We continue to see ready-made funds featuring in the top funds purchased on platforms who provide them.
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.
Banks are increasing activity
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.
Despite the fallout from the switch from Barclays Stockbrokers, Barclays Smart Investor continues to attract new customers. Across Banks we saw double digit percentage growth in customer accounts.
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.