Advised platform net flows plunged 38% to £2.8bn in the second quarter of 2023.

The quarter’s net flows were the lowest ever, according to the report from data and platforms consultancy the Lang Cat.

Adviser platform gross inflows fell 7.3% over the quarter to £14.9bn.

Outflows also rose to their highest quarterly level at £12.1bn. This means that for every £1 added onto adviser platforms between April and June 80p was pulled out.

Adviser platforms experienced a mix of nominal growth or loss in assets during the quarter, as the FTSE 100 fell by 0.31%.

Quilter passed Abrdn to become the largest UK adviser platform by assets under administration.

At the end of the quarter Quilter had £69.46bn in assets under administration, versus £69.35bn for Abrdn and £54.61bn for Transact.

Quilter and True Potential topped the advised gross and net sales tables respectively.

Rich Mayor, senior analyst at the Lang Cat, said: “Gross sales onto platforms are being hit by the ongoing economic headwinds we continue to see in the UK, and net sales are being reduced to all-time lows as outflows are at all-time highs.

“The $64m question is where is this money going? Platforms we spoke with noted an increase in client withdrawals from products to meet the demands of the cost-of-living crisis. We’re also hearing that some investors are looking to pay down lump sums on mortgages as their fixed deals come to end.

“For those with unencumbered properties we’re hearing from some advisers that clients are looking to partial and term annuities to help mitigate the more immediate market headwinds.”

A separate report from platform and fund consultancy Fundscape showed that despite platform assets rising to back over £900bn for the first time since the fourth quarter of 2021, sales for both adviser and direct platforms were hit hard.

Gross sales rose to £34bn but net sales plummeted to just £5.5bn, making the quarter the second worse since 2010, according to Fundscape data.

Gross sales for the adviser platform sector were £16bn, but all saw a downturn in gross and net flows.

Bella Caridade-Ferreira, CEO of Fundscape, said: "‘The cost-of-living crisis, competition from cash, consumer morale, and the Consumer Duty have wreaked chaos on the platform industry in 2023. No platform has been spared from the downturn in business.

"Inflation easing for the year to July was welcome news, but it also increased the likelihood of further interest rate rises with a knock-on effect on the cost of living and disposable incomes. The investment industry has faced significant headwinds over the past nine months and we don’t expect the outlook to improve until the first half of 2024 at the earliest. Platforms need to batten down the hatches and ride out the storm."

The M&G Wealth platform is not included in the figures from the Lang Cat due to M&G imposing an embargo date of 20 September for their data. The Lang Cat will reissue the data with M&G included on this date.