The fast growing but competitive investing platform space is about to get another player added to the ASX. Netwealth, which is known as innovative and technology focused, aims to list in November.
The trend of financial advisers moving from the big banks and going to smaller and medium-sized investment and advice firms is good for companies such as Praemium Ltd (ASX: PPS), Onevue Holdings Ltd (ASX: OVH), and Hub24 Ltd (ASX: HUB).
Hub24 is the best performing of the smaller platform providers of late being up 63% this year.
A wrap account (or wrap service) is a means of consolidating and managing an investor's portfolio and financial plans. This type of service is what is also known as an investment platform or financial platform service.
Platforms are popular with financial advisers as they can run managed accounts, and have the reporting capabilities from having a client's investments centralised.
Many advisers feel managed accounts are appropriate for clients with a lower balance and are becoming more popular.
A recent study has shown that 75% of planners are open to switching their primary platform, either for lower administration fees (47%) or a wider platform feature set (28%).
Even among the 47% who are seeking lower administration fees, functionality enhancements remain a significant driver of potential switching, so this will favour the smaller, innovative and less bureaucratic platform providers.
The study also found that while the big bank platforms such as Colonial FirstChoice and BT Wrap were the most widely used platforms, the newer platforms like Netwealth and HUB24 were extending market share and these two companies achieved the highest overall platform satisfaction scores with advisers.
Netwealth was founded in 1999 and has $14 billion in funds under management (FUM), with 2,000+ advisers using the platform. Being smaller and more agile gives the smaller platform providers the ability to innovate and respond quickly to adviser feedback.
Investment bankers, Credit Suisse and UBS have been appointed to manage the Netwealth IPO, which could possibly be in November, with a price range being set between $3.10 and $3.70 per share.
The owners, the Heine family entity, will retain a large stake (63%) when the company is listed, which is a good sign.
