Fluidity creates platform prosperity: netwealth

Investment platforms have a positive future in the financial services market.


By Julie May

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Investment platforms had a positive future in the financial services market although that did not mean platform provider netwealth, which was closing in on $8 billion in funds under management (FUM), would idly watch the world go by, the group said at a briefing this week.

Netwealth joint managing director Michael Heine said the providers that wanted to trump their competitors needed to be conscious of market movements, client needs, accessible technology, and be adaptable.

He said the business was often asked - and often asked itself - what the future looked like for the platform industry.

“Is a Google going to come out of the woodwork and suddenly blow it all away? We’ve got to focus on that question all the time,” he said at the group's annual business partners’ update.

“One of the interesting things is the administration area is actually a continuum - you’ve got the very simple solutions at one end through to the very complex at the other end.”

He said industry super funds, simple administration systems and brokers who provided some reporting services sat on one end of the scale, while fully functioning platforms that comprised managed accounts and the functionality to build a scalable advice solution were at the other.

Heine said there was no right or wrong place, as there was room for all those offerings in the market.

“What we have to be conscious about is where the market is going, what it is doing, what clients want and what new technology is out there,” he said.

Heine was confident platforms had a definitive place in the value chain but netwealth, like all participants, needed to evolve in order to survive and progress.

“We’re confident if we keep going the way we’re going, there is a really good future, but there are important questions we need to keep asking ourselves,” he said.

Meanwhile, he said it would be pretty hard for new entrants to get into the platform end of the market.

“A lot of people are talking about the overseas institutions possibly looking at Australia’s superannuation system, but I can’t see them coming in and wanting to get into superannuation administration in Australia [as] it is not a business that they’re doing anywhere else,” he said.

“[Further,] I think there is potential for Australian businesses to find niche markets and to develop their offering, and there’s probably some room for mergers and acquisitions in terms of the smaller players that either don’t have the scale, or have investors who are looking for a quick profit.”

He said acquisitions were certainly on the cards for netwealth, but “definitely not” a sale.

“We’re really about planning our growth, identifying the future, identifying opportunities and the next step will be the $10 billion,” he said, referring to the group’s next FUM milestone.

Following the presentation, netwealth announced yesterday that the AllianceBernstein Managed Volatility Equities Fund had been added to the platform.

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