How adviser churn hit Praemium’s Powerwrap FUA

The degree to which the churn of financial advisers between financial planning licensees can impact platform providers has been revealed by Praemium.

In an update filed with the Australian Securities Exchange (ASX) Praemium chief executive, Anthony Wamsteker revealed that the company’s Powerwrap product had been hit by the movement of advisers away from licensees using the Powerwrap offering.

Wamsteker said the Powerwrap scheme is specifically targeted to advisers with ultra-high net worth clients – something which “can lead to greater volatility as flows can be impacted by relatively small numbers of client movements”.

“The December quarter’s $334 million net outflow reflects the abnormally large impact of a small number of key advisers exits who have moved from advice groups utilising the Powerwrap platform to non-Powerwrap licensees,” he said.

“Gross outflows from these transitioning advisers exceeded $500 million over the last half-year.

Wamsteker also pointed to the likelihood of further similar impacts, stating it was currently estimated that the rate of outflow from advisers who have transitioned to a non-Powerwrap licence “will continue at a similar rate for a further six to nine 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.

More broadly, the Praemium update revealed that total funds under administration (FUA) for the December quarter rose by 12% to $48.3 billion w0% to $22.9 billion and separately managed accounts up 16% to $10.4 billion.

It said power wrap was up 5% to $12.5 billion.