The frictionless movement of assets is becoming a common feature of markets around the developed world, yet Australia remains a step behind. The ASX is in no mood to rush the move to T+1, however, after its calamitous attempt to implement distributed ledger technology.
It’s a dire situation for consumers but a massive tailwind for financial advisers. More people and more capital in the superannuation coffers than ever, with a stubbornly small number of advisers to service them.Â
Which platform stands out above the crowd?
The shift towards non-aligned platform advice forced structural change within the wealth management that was long overdue. Findings from the Royal Banking Commission helped drive the push towards independent platforms and product providers because of their renewed client focus.
New technology-based platforms have allowed financial advisers the ability to hold, transact and administer on a much larger product range across new and unique asset classes that solely benefit the underlying client, with no red tape and fewer limitations.
Often dubbed the “original fintech” platforms such as Netwealth and HUB24 were the pioneers that led the movement of advisers away from bank platforms. The wealth management platform space has become a highly competitive area as disruptive innovative start-ups threaten the status quo and cashed-up platforms acquire businesses to leapfrog ahead.
One of the primary reasons advisers have been flocking to the newer platforms is because of the limited product range and strict compliance limitations non-aligned vertically integrated groups enforce. The ultimate aim is to create the perfect wealth management platform that provides a solution for every type of client. A platform not owned by major financial institutions, but capable of non-aligned providing financial advice.
The platform space is made up of 18 platforms, dominated by the big banks. But because of the movement, this stranglehold is fast evaporating as advisers find greater value in the new generation platforms. The space is becoming highly competitive and ever so crowded. The big bank platforms have market scale and endless funding, but have been unable to stem the flow of advisers and money.
The new players offer flexibility, customisation, state of the art technology, more flexible approved product lists, managed accounts, customer interfaces, features and speed to rollout. Niche platforms that have a unique offering provide a stable platform and far greater offering than the big bank platforms. Simply competing on price and margins or offering discounts isn’t enough to win over advisers as we saw with the Praemium Powerwrap acquisition.
Praemium achieved significant growth via its takeover of Powerwrap. It helped the platform fly up the ranks to be on an equal footing with Netwealth. With a $1.4 billion portfolio in alternative assets across 350 funds and a predominantly high/ultra-high-net-worth client base, Powerwrap was a natural fit for Praemium given its top ranked Managed Accounts Product offering, and its next-generation investment portfolio reports. Praemium doubled profit, increased FUA to $27 billion.
As far as announcements and highlights go, the team at The Inside Network have compiled a list of platform announcements in 2020:
- Praemium took control of wealth management platform Powerwrap after making an off-market conditional takeover offer for all the ordinary full-paid shares in Powerwrap.
- IOOF gets one green light for $1.4bn MLC takeover. It will double IOOF’s FUA and place the wealth manager as #1 retail wealth manager by FUMA –$510 billion. #1 advice business by number of advisers 1,884 advisers and #2 super platform by FUA -$173 billion.
- OneVue announced access to managed funds through quoted managed funds and integration through Xplan. Advisers will have direct access to buy, sell and report all managed funds on OneVue’s registry through Xplan.  Â
- Selfwealth – Low cost online broking platform, SelfWealth, is launching its US equity trading platform.
- MLC’s Wealth Core Investment list has reached $1 billion in funds under management, after launching in April this year.
- Praemium integrated with Iress to help advisers seamlessly initiate new Praemium applications from within Xplan.
- Praemium’s existing paperless application with digital acceptance allowed advisers to invite their clients to accept an application form online, reducing onboarding time.
- HUB24 moved to acquire Xplore Wealth and sell Paragem. It also announced the acquisition of Ord Minnett’s non-custody Portfolio Administration and Reporting Service (‘PARS’). The proposed acquisition would add a considerable scale with a further $15 billion in FUA split between $8 billion in custodial platform FUA and $6 billion in non-custodial FUA.
- Netwealth – Funds under management rose 110% for Netwealth’s managed accounts, a record year of net inflows.
- Switzer Financial Group has launched digital platform Tilly Money to focus on the financial issues of women.
- Fintech platform NowInfinity, which was acquired by Class, has passed more than 500,000 entities on its platform.
- BT Panorama – Market-first integration of sustainability scoring of managed funds and listed companies, now accessible via the BT Panorama mobile app.
Assets under administration – platforms
According to Investment Trends, Netwealth again topped the list as the preferred investment platform for financial advisers. However, advisers are not platform loyal with the average adviser using 2.6 platforms.
Overall adviser satisfaction with platforms ranked Netwealth at number one, followed by HUB24, CFS FirstChoice, BT Panorama, and Macquarie Wrap.
