In its December 2018 quarterly business update, released to the ASX on 25 January, the company said its net funds under administration (FUA) flows for Q2 were $876 million while market movement was negative $1.2 billion, which resulted in FUA of $19 billion at 31 December, a slight decrease of $300 million (down 1.5 per cent) for the quarter.
Netwealth’s FUA increased $3.6 billion over the last 12 months, up 23 per cent on December 2017.
“While net flows for the quarter were below previous quarter and PCP flows, we remain confident of continued strong growth following significant competitor and industry changes which are occurring,” the company said in a statement.
“Following the announcement of new competitor pricing in late July 2018, many advice groups and financial intermediaries temporarily deferred their platform decisions to re-evaluate the impact of the repricing.”
According to Netwealth, many advice groups have now completed these reviews, “resulting in Netwealth being successful in winning their business”.
The company said that recent industry events and the royal commission hearings created additional impetus or advisers to review their platform strategies where they might not have otherwise done so. Netwealth said this review has opened up additional opportunities for the group.
“Management claim Netwealth is still winning customers despite competitors cutting fees, and that the royal commission into the financial services sector will be a tailwind for the business,” Morningstar analyst Gareth James commented.
“However, the quarterly update looked a little soft relative to key competitors HUB24 and Praemium, which both reported record inflows for the December quarter, albeit smaller in an absolute sense than Netwealth’s growth,” he said.
On 15 January, HUB24 posted a record $1.5 billion in net inflows for the quarter.
“Quarterly net inflows of $1.5 billion set a new record including the successful transition of Fitzpatricks Private Wealth inhouse MDA to the HUB24 platform,” the company said.
“Additionally, we continued to experience growth from our adviser base as they win new clients and transition FUA from legacy platforms in order access our market-leading functionality, creating value for their clients.”
(dark humor) At bunnings making platform and rope decisions. Waiting for RC report Monday.
Advisers are also likely to change platforms based on how restrictive and bureaucratic they become with processing client authorised adviser fees. There will almost certainly be compulsory changes stemming from the RC in this area. But some platforms will implement them far more excessively and bureaucratically than the law requires.
The business will move based on price, functionality and the removal of trail commission from legacy products. Best Interest Duty benefits those with current product.
Wondering if preferential pricing is out the window post royal commission? You wonder how many of these deals are loss-revenue for these platforms and more about market airplay (i.e. features not a decision maker)