Latest figures from the consultancy reveal that net adviser platform flows plunged 64% over the course of 2023.

ISAs and GIAs bore the brunt of the outflows as investors withdrew cash to meet living expenses, pay off mortgages, help family members or take advantage of annuity rates.

There were some signs of improvement in the fourth quarter, with assets under management for the advised platform sector rising 5% to £575bn, according to a separate report from consultancy the Lang Cat.

According to the Lang Cat, 2023 saw outflows of £53bn for adviser platforms in comparison to £39bn for 2022.

The Lang Cat noted that gross sales for advised platforms have been steady throughout 2023, with gross advised sales hitting £16bn in Q4 (a 17% rise year-on-year).

The platform sector as a whole reported net outflows of £8.2m in the fourth quarter, according to Fundscape, primarily driven by large outflows in the workplace and institutional platforms.

Bella Caridade-Ferreira, CEO of Fundscape, said that despite the high outflows in the fourth quarter, platforms should not despair.

She said: “The industry has gone through a period of painful adjustment with consumers adjusting to a new normal after 15 years of low interest and inflation rates. But as the saying goes, this too will pass.

“We expect interest rates to start to come down from mid-2024 and platform business to begin to recover in the second half of 2024 and 2025. We expect platform assets to grow to £1.6trn by 2028 and the adviser platform component to £995bn.”

Fundscape said it expects platform assets to grow between 7% and 16% this year.

The report highlighted that Fundscape expects the retail advised platform business to grow steadily over the next five years due to the ongoing demand for advice.