Under pressure platforms fight for inflows, market share

ANALYSIS

Australia’s major investment platforms are still solidly profitable but are finding the going much tougher with Insignia, Hub24, Netwealth and Praemium all reporting indifferent or negative inflows in the face of still-volatile markets.

And in circumstances where BT Panorama reported similar inflow challenges alongside AMP Limited’s North platform, financial planning licensees and their advisers can expect a continuation of competitive offerings in 2023.

In the meantime, both Colonial First State (CFS) and Insignia are in the throes of planning or implementing significant technical upgrades, with Insignia flagging a two-platform ecosystem while CFS is working hard on marketing its soon to be launched FirstWrap replacement Edge platform

While HUB24 and Netwealth have been regarded as the fastest-growing platforms over the past five years, the reality is that Insignia Financial via its acquisition of MLC Wealth is the largest player with 20.6% market share, followed by BT/Westpac with 17%, and then AMP via its North platform and Colonial First State both with around 14%.

Thereafter, the market share is divided by Macquarie with 14%, Netwealth with 6.3% and HUB24 with 5.7%, then Mercer with 2.9% and Praemium with 2.2%.

With BT Panorama having been on a sales block for more than a year, it is hardly surprising that speculation about bidders has traversed both Colonial First State (CFS) and AMP Limited, with CFS currently being canvassed as the most likely bidder.

By acquiring the Panorama business, CFS would leap to around 30% market share in terms of funds under administration (FUA), overtaking Insignia which is continuing to refine its platform approach.

There have been suggestions that, in the absence of an acceptable bid, Westpac might retain the Panorama platform. The difficulty with such a strategy would be the investment necessary to maintain its competitiveness as the other platform providers upgrade their offerings.

Indeed, Insignia announced last week that simplifying the platform suite was a key focus of its strategy to reduce cost-to-serve, while enhancing the quality and features of its offer.

It said that as part of its simplification strategy, it had “explored options to complement the continued investment in its proprietary, contemporary Evolve wrap platform technology”.

“A full-market review of Master Trust software solutions has been undertaken and Insiginia Financial has concluded that a two-platform is expected to maximise benefits to members and share-holders while th adoption of a third-party solution will allow Insignia Financial to implement a solution in less time, with lower risk and deliver functionality more quickly,” the ASX announcement said.