Hello there!
Rich Mayor here today, filling in for Mark as he’s off playing music with our very own Jenny Smyth and… um… me actually. At the time of writing, the Elsie Treeo (geddit?) is preparing to acoustically rock the room at the Verve Foundation’s event, a performance which by the time you have read this will be consigned to the history books. It’s been a fun little thing to do, and we’ve been balancing the set with verified ‘bangers’ and Mark’s need for very sad songs. As a result, I’ve learned a fair few tunes I never thought I’d ever learn, and have a newfound appreciation for the Backstreet Boys, Britney Spears and TLC (punk’s dead again anyway).
We’ve done our best to have our own take on them and to make them our own, “What about Britney, but more Mariachi?”, or admitted defeat, “Whoa… No Scrubs is actually jam-packed with jazz chords”, but it’s been a thoroughly enjoyable blast from the past.
You might not think that rearranging classic pop songs would tee up to a seamless segue into platforms, but you’d be wrong. Because in platform land, the big hits are back! But slightly different than before. Q1 2024 numbers are just about to be released and while I can’t talk much about individual platforms, there are some #interestingthings this quarter.
KEY CHANGE
The good news is platform gross flows are up. By quite a lot. In fact, it’s the fifth-best quarter for advised platforms on our records. The reason behind it is a classic: pensions. The abolition of the Lifetime Allowance – and possibly the messaging from Labour about bringing it back in – have boosted flows this quarter, and will probably continue to do so for the year or so. Pension flows across all channels this quarter are the highest we’ve seen since the height of DB transfer activity all the way back in 2017, when Ed Sheeran topped the charts with Shape of You.
It’s a solid reminder, that for all the other ways platforms have competed over the past little bit of time, the old adage remains that ‘if you wanna be good at platforms, you gotta be good with pensions.’ (Emma Bunton, circa 1997).
(DON’T WANNA HEAR YOU SAY)
Of course, it can’t be all good news. We’ve still got interest rates at their peak, and despite the news today that things are now getting expensive at just about the rate the BoE wants them to, things have been getting quickly more expensive for quite some time. That’s reflected in the outflows which once again have hit new heights, up about 10% on the previous quarter’s high. That of course has affected net sales, which although up 200%+ on the previous quarter, is growth from the smallest base we’ve seen.
From a product perspective, it’s pensions forming the bulk of platform growth, as has been the way for many years. If we combine net sales for ISAs, GIAs and bonds across all platforms we’re in negative territory this quarter, which results in the odd quirk of pensions forming 100%+ of net sales in platform land.
BCKSTRT’S BCK
Elsewhere in the rolling fields of Platform Land, abrdn swung the proverbial cleaver to its pricing. It’s not all that common to see these types of cuts, particularly in more challenging markets. But abrdn’s not had the easiest time of it of late, and its pricing has felt a little out of kilter to its main competitors for a bit longer than that, especially as most of its competition has reduced its charges (and you can compare all of them on Analyser right now).
In its simplest form, the price is a cut and a simplification of charges for abrdn wrap. It’s shed a tier, moving from four-piece to a trio and is more competitive on price at the lower end (even competing with Elevate sometimes) to the tune of 5bps up to £250k, and that gap grows the more assets there are, particularly when we move into what might be considered typical amounts to need and use a financial adviser.
The new pricing also works with abrdn’s drawdown lock. A peculiar quirk of percentage charging is that while more assets = lower percentage charge, the opposite is also true, and when you drawdown from investments you end up going back through the tiers and percentage charges increase. The drawdown lock, in short, allows you to erm… lock in the lowest percentage charge while you… drawdown. Fairly straightforward I guess, but it’s not picked up popularity I’d expected it might, and it was launched when I Love Sausage Rolls was Christmas number one in 2019.
The nag, and significant one at that, over abrdn’s new pricing is how long it’s taking to come into effect. Abrdn is putting the change live now for new clients (good), but existing clients won’t benefit from it until 31 March 2025 at the latest; hopefully a bit earlier in Q1 2025 (not so). Mark evidently found some time between learning Britney Spears songs to pen a much more thorough article on Analyser, which by now you should have heard about so I’ll leave you to login and have a butchers.
Music choice this week is simply one of the best duet live performances of all time, and if you’ve not heard it, it’ll be one of your favourites too. It’s Dearly Departed by Shakey Graves and featuring Esme Patterson (performance starts at 1 minute in).
