May 24, 2023

Will Q1 Showers Bring Q2 Flowers for Financial Advisers?

Will Q1 Showers Bring Q2 Flowers for Financial Advisers

Big Picture: On-platform financial adviser investment net flows and gross sales were significantly down from Q1 2022, with net flows being particularly muted. Net flows came in at £170 million in Q1 compared to over £4 billion in 2022. Gross sales meanwhile registered below £30 billion for the third straight quarter. All-in-all it was another uneven quarter. Looking forward, we will see if muted investment activity over the past three quarters will lead to a “catch-up” in investment activity amongst investors as the new tax year begins.

The layered perspective

Wrapper: A reversal in fortune was seen amongst wrappers with ISA net flows returning to positive after two consecutive quarters of outflows, and GIA accounts going into outflows after driving much of the positive flow activity in 2022. A key question outstanding is, where did the money go? As GIA flows are typically driven by more affluent clients, those who are likely to have maxed out their tax-advantaged accounts, there is an open question of whether this represents a need to cut back on saving given economic conditions, or a preference by these investors to invest outside of funds.

Firm: 785 financial adviser firms managed to post net flows over £1 million, signalling that there were still opportunities out there. This, however, represents only 25% of financial adviser firms that had gross sales over £1 million.

Platform: Platform results among the financial adviser channel varied significantly across our data, with eight platforms recording positive flows. The gap between the platform with the highest net flows and the one with the lowest was nearly £1 billion on the quarter.

Manager:  The Q1 fund manager story is best summarised as the good, the bad and the ugly. Starting with the good, 12 managers collected £100 million of more in net flows. The bad, more fund managers saw net outflows than inflows. And the ugly, well the best-selling five managers generated significantly fewer net inflows than the worst-selling five managers did in net outflows.


  • Sector: Unclassified, Volatility Managed and Global/US were the winners on a net flow basis.
  • Active/Passive: Passive funds continued their slow, but far from inevitable ascent, amongst the channel, recording over £1 billion in net inflows. Active funds meanwhile saw close to £1 billion in outflows.
  • Model Portfolios: Based on the data available at the time of recording, fund sales tied to the use of a model portfolio generated over £1 billion in net inflows. Non-model portfolio influenced sales on the other hand recorded just under £1 billion in net outflows.

Commentary by ISS Market Intelligence

By: Benjamin Reed-Hurwitz, Vice President, EMEA Research Leader, ISS Market Intelligence.

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