Market Summary - Q3 2018

£224bn AUA

Total market assets have grown 15.4% over the year from £194bn as at the end of Q3 2017 to £223.8bn at the end of Q3 2018.  This compares to an 6.1% growth in the FTSE 100 over the same period.

Customer accounts continue to rise

There are 4.8 million customer accounts at the end of Q3 2018, an increase of 22% over the year. In numbers, this is over 850,000 new accounts over the year.  However, a significant proportion of this comes from groups such as Aegon and True Potential Investor moving workplace pension customers onto their D2C books.

Robo-adviser growth

Robo-adviser assets have grown by over 40% over the 12 months to the end of Q3 2018. Total AUA is now circa £3bn. However customer accounts have nearly tripled over this period, which excludes True Potential Investor’s workplace pension customers which exaggerate the story.

Currently, their market share poses no threat to the traditional providers, growing from 1.1% 12 months ago, to 1.4% at the end of Q3 2018. However, we are seeing customers initially test propositions with smaller amounts, before later increasing contributions, as over 60% of robo customers have accounts elsewhere.

Banks continue renewed interest in wealth management

Santander became the latest bank to increase activity in the retail investment market with the launch of their Digital Investment Advisor with a substantial marketing campaign. We expect to see something soon from HSBC, after they launched a robo advice pilot in the US in October 2018. Lloyds and Schroders announced a tie-up to be rolled out in 2019.

Growth in simpler solutions

Across the market we continue to see growth in assets within ready-made portfolios and an increasing number of platforms own-brand funds now feature in their top fund lists. Across platforms that offer 3rd party funds, own brand funds can account for 2% - circa 12% of total platform assets. Hargreaves Lansdown’s own brand funds now account for over 10% of their total AUA.

Asset managers

Slow development as most brands continue to circle the DIY investor with caution. Vanguard is due to be launching a SIPP next year which will drive up £AUA and increase appeal.

Free trades?

2018 saw Freetrade launch in the UK, offering investors free trading of shares. With a waiting list of over 60,000 customers and FCA approval to launch an ISA, the app looks to be already popular amongst millennials. This comes off the back of the success of Robinhood in the US, which launched in 2012 and is now valued at close to $6bn. Challenger bank Revolut are also planning to enter this space soon.