Focus On Disruptor Wealth Platforms

Australia | Jun 04 2024

RBC Capital Markets sees further market share gains ahead for specialist wealth management platforms Netwealth, Hub24 and Praemium.

-RBC initiates coverage of Netwealth, Hub24 and Praemium
-Ongoing gains in market share expected
-March quarter results surprise brokers

By Greg Peel

RBC Capital Markets has initiated coverage of the three leading listed specialist digital wealth platforms Netwealth Group ((NWL)), Hub24 ((HUB)) and Praemium ((PPS)). Wealth management platforms are not themselves fund managers – they do not offer investment advice – rather digital platforms on which investors can consolidate and manage their own investments via various tools and data analytics.

They are thus most popular with higher-wealth investors and their financial advisors.

The three small “disruptors” have received a boost in recent years with the exit of banks from wealth and specialist platforms. While all three have made significant inroads, they are still dwarfed by incumbents in the field such as Insignia Financial ((IFL)), BT, AMP Ltd ((AMP)) and others which each boast 12-20% of the market, while the leading small player – Netwealth – has 7.6%.

RBC Capital sees a long runway for growth for all three smaller players, leading to increased scale and thus greater fixed-cost leverage.

Netwealth Group

Netwealth is Australia's largest and most profitable specialist platform, RBC notes, with a primarily in-house developed product and a strong focus on developing out its core capabilities. The platform has a strong track record of growth, with a four-year historical compound annual growth rate of 21% for revenues and 18% for earnings, supported by its highly rated product and service offering which was voted number one for overall satisfaction for eleven consecutive years by industry monitor Investment Trends.