Adviser transition continues to impact Praemium’s platform outflows

In its results for the March 2024 quarter, Praemium announced total Australian funds under administration (FUA) growth of 22 per cent to $53.3 billion, while its platforms business added 12 per cent to reach FUA of $24.3 billion.

Powerwrap continued to experience outflows but to a lesser extent than in the preceding quarter – $53 million compared to $334 million in the December quarter. It’s FUA, however, rose 5 per cent to $13 billion, while Praemium Separately Managed Accounts added 19 per cent to $11.2 billion.

Praemium chief executive Anthony Wamsteker pointed to a “small number of key adviser exits” for the continued Powerwrap outflows.

“Overall, the Powerwrap scheme experienced $53 million in net outflow. This was a significant retreat from the elevated $334 million in net outflows of the previous quarter. The risk remains that a small number of key advisers who have moved advice groups will transition their clients to a non-Powerwrap solution,” Wamsteker said.

“Gross outflows from these transitioning advisers exceeded $700 million over the three most recent quarters.”

Absent any further adviser movements, Wamsteker said it is currently estimated that the rate of outflow will continue at a similar rate for at least a further six months.

“Whilst unfortunate, over the long term Praemium and Powerwrap clients have typically grown their businesses at strong rates. This should ameliorate the negative impact of the transitions which might arise from the known adviser exits,” he said.

On a positive note, Praemium said OneVue FUA of $4.1 billion was added in April, bringing total FUA to $57.4 billion as at 15 April, and platform FUA to $28.4 billion.

“The addition of this new FUA is underpinned by long-term relationships with high-quality clients. The increase to platform FUA of 17 per cent to $28.4 billion represents a material uplift in scale,” Wamsteker said.

Describing the Praemium SMA scheme as “our cornerstone product and highest revenue margin service”, the CEO said it achieved quarterly net inflows of $254 million. On an annualised basis, this represents approximately 10 per cent of the quarter’s opening FUA.

Praemium’s VMAAS non-custodial portfolio administration and reporting service also experienced FUA growth of 32 per cent to $29.0 billion as at 31 March 2023.

Commenting on this, Wamsteker said: “The strong growth in FUA on VMAAS highlights the tremendous potential of that service.

“Our non-custodial capability remains market leading and represents a significant opportunity for Praemium. Inclusive of the core VMA software offering, Praemium provides comprehensive reporting solutions for more than 64,000 portfolios (~60,000 at 31 March 2023).

“Our non-custodial solutions are essential in providing advisers and their clients with a whole of wealth view across their investment portfolios. In the financial year to date, Praemium has welcomed 36 new client organisations to the VMA and VMAAS services.”