Welcome back compadres, fellow-travellers, playmates and I hope you have settled into the year with aplomb. Feels like a fast start this time; faster than usual maybe. That said, I can barely remember 1975 at all, so I’m not the best person to ask. Oh no, wait a minute, that was David Bowie. I was one year old in 1975 and certainly not oxters deep in the celebrity sherbet. But it does seem like a fast start, and a cold one too. “Colder than a well-digger’s ass” growled Tom Waits, back in 1974, and he didn’t know it then but this week in Embra is exactly what he was talking about. Weather updates are what you came here for, right?
We probably need a fast start as the tail end of last year wasn’t all that and a bag of chips. It’s still early to hear how things played out across the market, but we’ve got a couple of key results in and while I don’t know if they’re a bellwether for the market it would certainly make this week’s Update easier if they were, so let’s say that they are and let that be an end to it.
Transact first – the perennial adviser favourite did £700m net flow last quarter, but that’s down from nearly £1.3bn net in the same quarter of 2021. AUA was £2bn down on Q4 2021. Transact pins this on market movements and that’s understandable – but outflows were also up to £769m from £688m in Q4 2021. To save you getting your calculator app out, that’s about 11% more outflows.
I don’t know what’s caused those – sometimes big chunks leave due to consolidation activity (funny how transfers are easy when a firm’s just been bought, eh) and I don’t think Transact’s particularly in the firing line for anything (though we’ll see when the rest of the providers declare).
I am interested, though, in whether we’re seeing the cost of living crisis start to bite a little. Advised clients are obviously normally pretty affluent and I’m sure most of them can afford their electricity bills just fine – but the same may not be true for little Jacintas and Julians who’ve spent all their readies on avocado toast or something and can’t pay the gas bill let alone the deposit on a flat.
Where we have initial data, it looks like Q4 was pretty flat at best and modestly down for lots of platforms, and that’s what Quilter’s guidance suggests too, though its figures aren’t ready for public consumption yet. Others who’ve already ponied up their figures report similar patterns.
To be honest, the platform space is now pretty mature, and a bit of uppy and downy here and there isn’t all that important in and of itself. I’m more interested in what it tells us about the experience of adviser firms – platform figures are just an aggregation of what advisers are experiencing in this space. So if firms are starting to see redemptions and outflows over and above expected attrition rates, that’s interesting. A sector that’s camped out upon the peachy twin cheeks of the positive economic bottom of rising markets and wealth accumulation may need to ready itself for something a little bit more challenging – perhaps the welldigger’s ass of the song. We’ll see. Maybe you can let me know what your Q4 was like.
- First up, it’s nearly time for us to publish the fifth wave of our HOOJ adviser research omnibus study, State of the Adviser Nation or SOTAN. And if you think I haven’t spent time trying to make a title that says SATAN then you really don’t know me. Anyway, we’re launching tomorrow with results from 600 firms and you can come and have a sneaky peek for free if you like – Steve and Rich will be doing a webinar at midday tomorrow. It’s like 2020 all over again. Come register here, or don’t. Your loss.
- Home Truths update – if you would like to stream our event on 9 Feb for free, then you need to register here. We’re sold out for in person tickets now, but more will come available as folk’s plans change I’m sure, so you can also join the waitlist. Some folk have already benefited from same. If you register, we’ll send timings of each session so you can choose which to watch and which not to. Agenda is on the website too.
- FCA love you back and to prove it have a Consumer Duty podcast which is actually useful. Worth a listen.
- Housing wealth and intergenerational transfer of same is an issue that’s not going away – it’s also one that affects most clients at some stage. Happily Old Tom has a podcat just gone live on that very topic with Jim Boyd, CEO of the Equity Release Council and it’s very good.
- And your music choice this week – no-brainer really. Please enjoy Diamonds On My Windshield by Mr Thomas Alan Waits. Fifteen feet of snow in the east…
See you next week