Let me start by walking through the key points of today's statement. At the end of December, AUMA was GBP 511 billion, up 1% in the quarter and 3% for the full year. As it has done throughout 2024, Interactive Investor delivered strong organic growth in Q4. In the year as a whole, customer numbers are up 8% to 439,000. In Investments, we saw net inflow in the quarter, including GBP 2.3 billion into Institutional and Retail Wealth (IRW), driven by alts, quants, and liquidity, and in Adviser, AUMA was flat in the quarter, with positive markets offsetting outflows. Returning to net inflows remains our top priority for this business. One year ago, we announced an ambitious transformation program to create a stronger and more efficient group, and I'm encouraged by the progress we made in 2024.
We've achieved just over GBP 100 million of run- rate savings, and we remain on track to deliver our target of at least GBP 150 million of annualized savings by the end of 2025. A return to group inflows in Q4 capped a substantial improvement in flows year-on-year. I believe we've laid the foundations for growth, including strengthening our leadership team to ensure we have our best people in front of our biggest opportunities and challenges. Xavier Meyer, our new CEO of Investments, and Richard Wilson, our new Chief Operating Officer, were both appointed two months ago, with Richard remaining focused on sustaining the impressive growth in Interactive Investor while also being asked to improve operational efficiency and automation across the group, utilizing his proven track record in ops and technology. Xavier's first focus is our clients, bringing them better experience, service, and product performance.
Together, we're all focused on realizing the significant headroom that exists in this group. Now, just a moment to look at each of the businesses in a little more detail, starting with investments. AUM was up GBP 1.5 billion in the quarter to GBP 370 billion, driven by inflow into IRW, together with positive markets. IRW saw GBP 2.3 billion in the quarter and an overall inflow of GBP 0.3 billion for the full year. This is a huge improvement on the GBP 17.9 billion of outflow in 2023, reflecting a material reduction in redemptions and a 31% improvement in gross flow year-on-year. Fixed income achieved flat flows for the full year, compared to an outflow of GBP 4 billion in 2023 and had an outflow of GBP 0.4 billion in the quarter.
Unpicking the net inflows a little more, in the quarter, there was GBP 2.3 billion into liquidity, GBP 1.1 billion into quants, and GBP 0.7 billion into alts, driven by private credit and Insurance Partners had a net outflow in the quarter of GBP 1.8 billion, with AUM flat in Q4 and up 2% in the year. Gross inflows amounted to GBP 7.7 billion in the quarter, with offsetting outflow primarily reflecting the heritage business in run-off. We still have further to go on flows, but 2024 was a step forward, recognizing our growth is in lower margin areas. Looking across the Investments business, we have seen a further improvement in investment performances, with all major asset classes improving on a three-year basis. Let me now turn to Adviser. AUMA at the end of the year was just over GBP 75 billion, and in Q4, positive markets were offset by outflow of GBP 0.9 billion.
Broadly speaking, this follows the trend throughout 2024, with AUMA up 2% for the full year. As you know, our priority is to return to positive net flows as soon as possible and to do this with improved service for all of our IFA clients. On that, key achievements in Q4 included improved sign-up and transfer-in times on our Wrap platform, with this progress reflected in our higher Net Promoter Scores for service. However, there is more work to be done to restore the business to growth and a market-leading position. I'm pleased that all three senior hires I referenced on the Q3 call in finance, technology, and distribution are now in role and have started. I know they'll be instrumental in helping Noel deliver on the strategic priorities we've set for Adviser business. Finally, turning to Interactive Investor.
It's been another strong quarter for ii, with customer numbers up 2% in Q4 and 8% for the full year. The business attracted GBP 1.4 billion of net flow in Q4 and GBP 5.7 billion for the full year, which is almost double 2023. ii ranks as the number one platform for U.K. direct-to-consumer flow in the first nine months of the year, attracting approximately one-third of the industry flows. This is an incredible strength we can build on. And on SIPPs, which are a strategic focus area, we have now surpassed 80,000 customers, up 5% in the quarter and 29% for the full year. AUMA in ii was up 4% in the quarter to GBP 77.5 billion, which is 17% higher than the end of 2023, with customer cash balances of GBP 6.2 billion at the end of the year.
Trading volumes in 2024 were up 29% year-on-year, with increased use of our platform's global trading and FX capabilities supporting a notable increase in international trading, and you can see we have added a table of KPIs in the release, as you requested, on the Q3 call. We expect the strong organic growth in ii to continue this year, and we're confident that increased customer numbers, AUMA, and trading activity will lead to increased profits and a more significant contribution to the group's operating profit in 2025. To conclude, we've finished 2024 on a stronger footing, with a notable improvement in flows year-on-year and operating profit expected to be broadly in line with consensus. This provides us with a solid base for growth in 2025.
There does remain much to do to achieve the level of profitability that I and my team believe this group is capable of, but I'm confident that the talent we have in the business will allow us to achieve sustainable long-term growth. And I'd like to say thank you to our clients and my colleagues for their support in 2024, and I very much look forward to working with you all in 2025. And with that, we're now happy to take your questions.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing Star 1 on your telephone keypad, and please make sure the mute function on your phone is switched off to allow your signal to reach your equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing Star 2. Again, it is Star 1 to ask a question. Our first question is from Nicholas Herman from Citi. Please go ahead.
Yes, good morning. Thanks for being with us. Just two questions from my side, please. One on Investments, one on Adviser. Could you please talk about the Investments pipeline into 2025, please? And then from a margin perspective, you said that you expect to be below 22-22 basis points in the second half. That seems pretty reasonable. I guess in light of the recent flow mix with subdued demand for higher margin EM APAC products, how are you thinking about the margin for 2025 financial year, please? And then on Adviser, you said that you're aiming to return to net inflow this year. Price gap's obviously well known. What service improvements have you put through so far, please, that have driven the improved engagement and customer reviews, and what's outstanding?
I guess in terms of timing to get back to net inflows, is that fair to say that's more of a second half event rather than a first half event? Thank you.
Okay. Thanks, Nicholas. I think I got your first question. I certainly got the second one on Adviser. So Adviser, look, we've taken significant steps this year to improve services I mentioned, and we've looked at every process. It's all been mapped, very carefully thought through, working with FNZ, how they provide that. I mentioned two in my comments there around transfer times and lead-in times onto the platform. Money in, money out, the two key processes that we have to get right, and we have to do it quicker. And we've been very laser-like focused on making sure that that works very smoothly for our clients. It's getting better, and you can see that in the NPS scores.
I think we just need it to bed in a little bit and to see that quarter after quarter, and we can start to get people's confidence going up in the platform. But it's performing well, much to Noel's chagrin. We look at the MI weekly, we get into it, we go through all of the data, and we're seeing real progress in terms of client support for that. But we've also made a pricing change as well. I think we shouldn't walk past that. We do need to be more price point competitive as we get out into the market. So all of this takes a little bit of time. There's still a bit of proposition work to complete. The most notable piece is to bring the pension onto the platform. The moment it's still hosted on Phoenix, the eighth anniversary of that deal. But there we go.
We just need to kind of bring that in, and there's work to do, which will be completed this year. But it works now, but it'll work better once we have it in one environment. I'm not going to give you a precise when do we break even phrase. I'm committing to doing it this year. It does take a bit of time, and we are building momentum in terms of the way that we see it, but we are absolutely focused on that. On the investment side of the fence, look, we're not giving a specific margin update, but the points you make are sensible. We have seen growth in lower revenue margin, AUA, and a slight mix shift in the book. So t herefore, we would expect the revenue margin to be lower both in the second half of this year and going into 2025.
So we'll give more details on that with the results call. But yes, directionally, you're absolutely right. That will just be ticking down as we have a mix shift. But that is profitable business. Let me be clear on that, but that's moving further forward. But the pipeline remains good. We gave some specific updates on that previously. We continue to win some good mandates, particularly in the fixed income side, which are due to fund in the first half of this year. There's a couple that we've lost as well. I mean, I'm not going to be Panglossian about this. There's a couple that we've lost. So there are things in, things out, and we'll give a further update. But we do see momentum in fixed income, in alts, in quants, continuing through 2025.
Equities, we do continue to trade, but the net flows in equities are still not where we want them to be.
That's really helpful. Thanks very much. Our next question is from Mandeep Jagpal from RBC Capital Markets. Please go ahead.
Hey, good morning, everyone. The first one is on ii. Customer numbers up two quarters, likely to increase fund awareness, kind of update on what's the reason run rate going forward, that business piece. And then in alts, you mentioned private credit as a driver of inflows. What is the fundraising and product pipeline looking like for the asset classes?
You broke up slightly, but I think the question is, what's the sustainable growth rate in ii? I think 2% of quarters is a pretty good number to stick with. We're trying to aim for sort of high single digits. Somewhere 7%, 8% for the year would be a very good outcome. If we can repeat my sort of message on this, if we can sustain that growth in 2025, so we repeat what we did in 2024, I'd be really pleased with ii's performance. That's the sort of level that we're aiming for in 2025. I hope that was your question. On private credit, I haven't got specific numbers for you. We continue to be focused on developing in that segment. We do a lot for Phoenix there. We continue to support that, and we have some good capabilities.
But we're not huge in private credit, but we have continued to create growth, and we do see real upside there and continued demand. We have high-quality, lower-volume business. I want to have higher quality and increasing volume business, and that's the sort of something that we're working on for 2025.
Thank you. Our next question is from Hubert Lam from Bank of America. Please go ahead.
Hi, good morning. Thanks for taking my questions. I've got three of them. Firstly, can you expound a little bit more on the fund performance? I know, Jason, you said you're improving on the three-year. We could talk about equities and fixed income, how they're performing on a one and two-year basis. And the second question is on fixed income outflows. You continue to see fixed income outflows in the quarter despite industry inflows, particularly on the DM side. Can you just point to reasons as to why you think you're underperforming in fixed income? And Insurance Partners, for the full year, you had outflows of about GBP 4 billion, GBP 4.3 billion, mainly, as you said, stemming from the heritage business. How should we think about what the run rate is going forward per year, say, the next year, in terms of outflows from here?
I think the GBP 4 billion is a little bit higher than what we expected. So how should we think about this going forward? Thank you.
Yeah, sure. So on fund performance, if I start with your first question first, I said that all asset classes are up. I'll look at the June numbers, which I think you've got from the half-year results. We're at 54% on a three-year basis. We're now at 60%. Everything's up. Equities are up. I'm not going to go through each one of them, but overall, I think the equities number that I'm most focused on is the one-year performance, which is up from 23%-32% outperforming. That's about industry standard now, unfortunately for the industry, but we continue to try and push that further forward, and we want to do better than the industry. Of course, we do, but we made some progress there. We've obviously got further to go. So that's where we are on the one-year basis.
The total figure is up from 70% outperforming to 77%, just to compare the last six months. So that's still work in progress, but we're going in the right direction. Fixed income outflows, yeah, they're slightly smaller. I'm sort of talking about the GBP 4 billion out last year. It's down to GBP 0.4 billion, so that's a 90% improvement. We've got new leadership there. We've got a renewed initiative. I just commented on one or two very large wins in fixed income. Again, we need to balance that. There will be other losses, and some of our mandates that are huge. So there are lumps, but we do see growth in fixed income throughout 2025. But there's nothing to flag around performance or anything specific. There's probably one client did move from more active to more passive strategies. That happens, but there was nothing particular there.
On insurance, to repeat what I just said, that can be a bit lumpy as well. I think the key thing for me is that we support Phoenix in their growth strategies, and we continue to do that on DC pensions and BPA. We are doing everything that we can to support them where we can. We have a strong partnership. I think the heritage side is evolving and is, broadly, I don't know Phoenix's book, but from my experience, heritage books run off around 7%, 8% a year. That's kind of what happens. So across the board, it's probably slightly higher this year.
I think if we can continue to support them, maintain the what I'm really focused on, actually, is the revenue base within Phoenix rather than the AUA, because we could lose some very large mandates, but very low basis points, or we could start to grow that. But I'll talk a bit more about this with results, but continuing to support them, to simplify the operation and maintain the revenue is really the top priority.
Great. Thank you. Our next question is from Enrico Bolzoni from JP Morgan. Please go ahead.
Hi, good morning. Thanks for taking my question. So one on ii, you mentioned that you expect an increasing contribution. Can you please give us an update on what sort of margin you expect is achievable on cash? And then also, can you give us an update on what sort of cost-income ratio for this division of the business you think we should expect over the medium term? So that's my first question. And the second question is on the Investments vector appointment of new management there. So what do you think the key area of focus will be, more on investment process or more on the sales and commercial effort? Can you just give us any color? And then finally, any update on the pension surplus that you can give today, or do we need to wait for the full set of numbers in March? Thanks.
Okay. Look, in reverse order, there's no update on the pension surplus, but I will commit to giving you an update on March the 4th on that. We have been making two steps forward, one step back. That's probably the right way to put it. But we continue to focus on that, and we'll update you when we can. On the ii cash margin, I think this year, without wanting to forecast it too far in advance, we're not expecting any significant reduction in that margin. Obviously, the yield curve does make a difference and the rate and the shape of moves. But in a falling yield environment, you'd slightly make more, certainly in the near term. So we will see how that plays out just because we can invest slightly longer through the cycle.
So as I think about 2025 and 2026, we are pretty confident about the margins there. And look, the business in ii, its single biggest strength is its operational strength, its efficiency, its technology. Frankly, it's excellent. That is seen in its very low cost-to-asset ratio, which we'll try and sharpen. But on the cost-income ratio, I think we're pretty confident that it should be below 60%. I know we might strive for a bit better than that, but certainly, if you're going to pin me on a Q4 trading call, I'll go with below 60%. Now, Investments. Look, Xavier's hugely experienced both in Europe and in Asia. We're sort of working through focus areas for our products. Peter Branner is the CIO, has been in place now nearly two years. I've elevated him to the ELT just to demonstrate and reinforce the importance of investment performance in the group.
Nothing major on investment performance. I mean, Peter's work, we're starting to see real progress there, and we'll continue with that. I think with Xavier's leadership, frankly, it's about getting the organization back to focus on its core strategic strengths and grow the business efficiently. The cost reduction plan is well progressed, but it's not finished. That needs to be completed. Operational efficiency within that business, given the level of profitability, does need to improve. There is a cost-out continuation, but we won't achieve our goals in that segment if we can't grow it. We are very focused on that.
Thank you. We will take our next question now from Greg Simpson from BNP Paribas. Please go ahead.
Yeah, morning. Thanks for taking my question. Just two on my end. In H1, ii's subscription or account fees were down slightly half and half and year-on-year. I'm just wondering if we should expect those to converge more with client growth going forward, which, as you say, is pretty good at 8% year-on-year. And then secondly, on alternative investment solutions, you had good inflows, but the revenue margin in that category is pretty low at 13 basis points relative to the alternative industry. Just wondering if you could share your thinking about what you see abrdn's role or positioning in alternatives going forward in terms of what you want to build out and just the way you've sold private equity, but it is a growing part of the industry, and you thought it'd be great. Thank you.
Yeah, sure. Thank you. Look, on the Alts side, look, you're right. We have got a lower margin proposition. Some of that is the very attractive rates that we do some of our bulk deals for some of our major insurance clients, which is fine. We continue to be price attractive on that. I think we've got an opportunity to improve that as we go into more, I'll call it third-party growth, but you get what I'm saying on that. We've seen really strong growth in some of our active ETFs in the U.S., particularly in commodities with metals and mining, which is doing well, and I think likely to continue, frankly, with this change of government. I think that's a good place to be. Not super high margin either, but it's continuing to be a really, I think it's our best-performing growth fund, certainly in the U.S.
And then if by alts, you're thinking of real estate as well, clearly real estate is a key element for us, and getting that business back to sustainable growth is a high priority for us. We do see increasing demand for real estate in an interest rate cycle sort of settled a little bit. We can see good outlook there. So our real asset business is really at the heart of what we're actually trying to grow. ii subscriptions.
You've done ii coverage?
Look, the growth in subscription revenue should follow pretty much the growth in customers. I mean, there's a little bit of how the products, it does range between SIPPs at GBP 19.99 a month through to the Investor Essentials a GBP 4.99 in the subscription price. There's a slight mixed shift. I think we saw a little bit of a run-off of a final book that's now done and out of the numbers, which is good. So absent a better answer, I think the 2% growth in customer numbers would be 2% growth in subscriptions primary facing.
Thank you. Thank you. We will now take our next question from David McCann from Deutsche Numis. Please go ahead.
Great. Morning, everyone. Yeah, two for me as well. The first one on Interactive Investor. The FCA's priorities lists on progress they'd like to see made on Consumer Duty for 2025. You might have seen they published in December, and interestingly, that had platform interest margin listed as their number one priority for the year. I guess based on your recent conversations with the FCA on this, do you think anything has changed in their thinking or approach to this? And indeed, versus your own thoughts that you previously shared with the market on this topic, that's the first question.
The second question, Jason, in your closing comment in the statement, you said, "I look forward to providing further information on our strategy with the full year results." Was that intended as a subtle signal that you expect to have something meaningful to say on strategy, or am I just reading far too much into that comment? Thank you.
Well, nice try on the last question. I think I've been in this role coming up for four months, full-time, or permanent, probably rather. It was full-time before. We'll give the results, and I certainly plan on talking much more about how we're trading in the outlook for 2025 and what we're focused on and the focus areas. But it's as part of a results presentation, so just to be clear. But I will be spending more time talking about strategy than in a standard results presentation. So if you calibrate what I'm likely to be saying in a results presentation, it's very much focused on the organic improvement of the three core businesses. I'll go that far, plus an update on the pension surplus, which I know you're all excited about.
Consumer Duty for ii, we, and I think the FCA agrees with this, I'm pretty sure they do, is it's an extremely attractive platform, both from a price and a service perspective for consumers. I think it gives excellent value. And frankly, that's why it's growing so fast. It's got service and value at its heart. It's done very well. We continue to do that. And I think your question is probably, what risks do I see to platform cash? I frankly don't see significant regulatory risk there. And we've had this topic for over a year now. We've engaged on it. We've taken some simple steps to make sure that disclosure and there's no implicit attempts to sort of bring people in on a cash proxy basis is relatively straightforward, I think. So we're confident, really confident where we are.
Okay. Thanks. Just to clarify that last one. So what you're saying, it doesn't sound like you think anything has changed the regulators' thinking or their approach based on their recent conversations. Is that a reasonable takeaway for myself?
No. No. I think a year on, if they were going to do something, I'll have another look at what you just referred to, but certainly as it relates to us, and I can only really comment on us rather than either the regulator or others in the industry. The question was raised over a year ago. We've engaged very proactively, and there's no further action that we are expected to take.
Okay. It was just because it appeared so high up their list in a document in December. And like you say, this has been outstanding for a year or more. I was just quite surprised to see it so high up their priorities list in that December publication. But yeah, anything further into your thoughts would be great. Thank you.
Thank you. We will now take our next question from Michael Werner from UBS. Please go ahead.
Thank you very much. Two questions, if possible. Number one, I think you mentioned a bit about some of the gains you've seen in ETFs. Can you just remind us the size of your ETF platform and what the flow trend has been over the past couple of quarters? And then just on the, you noted cost-cutting program is going well. Seems like you may be even a little bit ahead of schedule.
Is there scope for you guys to increase that in 2025? Thanks.
Sure. Thanks. Good morning. On the cost side, we've got good progress. We're about GBP 10 million ahead of what we said in terms of P&L. So it's not radically different, but I'm pleased with where we are. I'm pleased with the progress we've gotten. I'm pleased with the way the organization has reacted to the transformation program. And I'd like to thank everyone involved in it because we've made real steps on that. We will continue to strive for operational efficiency. We'll look for that wherever we can find it, but I'm not signaling here an increase in targets. We will move from a big target to just operational efficiency will just be a key plank of what we're about. And that's something that I'll talk more about during the course of the year.
On the total ETFs that we have, I'll probably get IR to give you a call if I may, on this or rather not give you a number. I don't have it at my fingertips. Thank you.
Okay. Thanks, Jason.
Thank you. As a reminder, to ask a question, please signal by pressing star one. We will pause for a moment to allow you to signal. And we have a question from Charles Bendit from Redburn Atlantic. Please go ahead.
Thanks very much for taking my question. Just one for me on the investments business, please. So it looks like quantitative net flows were strong at 1.1 Q4, and that was quite significant in the context of the IRW segment, which had zero net flows, ex liquidity. But then there was also a GBP 1.7 billion transfer of assets from Insurance Partners. so is the quant flow being enhanced by a mandate Insurance Partners that's then been reallocated Insurance Partners? just trying to reconcile the overlap there. Thanks.
Okay. No is the answer. It was just the way we were sort of trying to figure out how to best present that in the numbers. So you have to sort of, there was some language in there about other movements, which I think you just picked up on. It was an allocation between two lines. But the overall growth in quants is good. I think we have a relatively small, in an industry sense, but actually it's a very high-quality business that we have built from good technology. And actually the pipeline in quants, you'll hear more about this, it remains very good as well. So okay, it's not the highest margin, we know that, and you know that. But we continue to be good at it. It's described by one of my colleagues as a little bit of a hidden gem.
We are continuing to think, how do we deploy its capabilities more broadly?
Thanks so much. And could I just ask one follow-up, if I can, on the Adviser business? Just wondering, after the repricing took place or was announced in May and implemented in part then and in part now, I think, how competitive does the platform look now versus the competition? Thanks.
We think very competitive, both in terms of price and service. We took our medicine. There was no point taking half of it. We went to the level that we thought we'd be competitive. The margins that are, I'll call them the rack rates, there's still ability to be commercial for large clients and to do things. We'll continue to trade intelligently to make sure that we return to positive flows. I wouldn't want price to become an impediment to people using our platform, which is really all about service, but we need to make sure that price is there and thereabouts.
Thanks.
Thank you. We will now take our next question from Steven Haywood from HSBC. Please go ahead.
Good morning. Thank you. Just one question. I wonder if you can give us an update on whether you've been looking at any M&A recently, anything announced in terms of teams or portfolios or bolt-ons, or is there any specific opportunities that you might be looking at going forwards? Thanks.
Actually, pretty quiet on that front. We sold Focus Business Solutions just before the year end, which was a software business that Standard Life had bought a decade ago. Did some good things, but just wasn't core to what we wanted to do going forward. M&A appetite, as I've said consistently, is low, and there's nothing, it's relatively quiet on that front.
Okay. Thank you.
Thank you. And it appears there are currently no further questions at this time. With this, I'd like to hand the call back over to Jason Windsor for any additional or closing remarks. Over to you, sir.
Great. Well, look, thank you all very much for joining. Pleased to be able to give you this update today. Do follow up with my IR team with any follow-on questions. And I look forward to catching up with you on March the 4th.