Key adviser exits continue to dent Praemium’s performance

Praemium’s Powerwrap platform experienced net outflows of $53 million as advisers continued to transition, bringing total gross outflows from these transitioning advisers to over $700 million.

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. Its 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.

“While 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.

OneVue migration

The firm has also appointed Brett Marsh as head of platform integration following the completion of the OneVue acquisition from Iress.

As announced in late February, the firm said it would sell its platform business to Praemium for an initial $1 million cash consideration. At the time, Iress CEO Marcus Price said the decision to opt for Praemium was a “natural home” for the platform.

In an ASX statement on 15 April, Iress said the deal has been successfully completed and the proceeds of the asset sales will be used to retire debt.

Marsh will report to Wamsteker. He spent 14 years at OneVue Group in a variety of roles including head of product and chief financial officer. He then moved over to Iress upon the acquisition in 2020 as head of product-platform, then head of financial platform.

Following the acquisition by Praemium, he has now moved over to assist with the integration which is expected to take 18 months.