Platform consolidation on the horizon
The Australian investment platform market is facing further consolidation with Colonial First State (CFS) now in the hands of private equity, MLC close to sale and with Westpac/BT understood to have briefed some dealer group executives about its future intentions with respect to its array of platform offerings.
Dealer group executives have told Money Management they expect that, in the end, BT/Westpac’s platform offerings will be focused on BT Wrap and Panorama, leaving a question mark hanging over Asgard.
Senior platform executives had also noted the changes to the market driven in large measure by the exit of the major banks, leaving Netwealth and HUB24 to dominate adviser satisfaction ratings and acknowledged the likelihood of further consolidation, particularly as the sale of CFS and MLC play out.
However, they are also suggesting that while there may be fewer platform offerings, those platforms may have to have greater scale in circumstances where any are already arguably much smaller than the largest industry superannuation funds.
HUB24 director of strategic development, Jason Entwistle said the consolidation would be driven by the reality of net flows, in circumstances where the days of healthy inflows had ended with many of the major platforms now having to deal with outflows.
He said that when this was taken together with the expected changes to ownership at MLC and CFS, it was hardly surprising that there was an expectation of consolidation.
Netwealth joint managing director, Matt Heine said there was definitely a lot of activity in the platform market.
“After a number of years of speculation, we are starting to see ‘a changing of the guard’ with new owners emerging, such as KKR buying into CFS, IOOF acquiring ANZ wealth and the recent announcement by Iress to acquire OneVue,” he said.
“Whilst it’s not hard to imagine consolidation could continue at both ends of the market there is still a lot to play out over the next 12 -18 months and we could just as easily see the current number of providers exist but under new owners or structures.”
Heine said scale remained important, given increased operating and regulatory costs at a time when fees had been reducing, but only if there was a commitment to ongoing investment into technology and the service that supports it.
“The needs of advisers and their clients continue to evolve rapidly and platforms need to be evolving with them to remain relevant today and into the future. This has become even more apparent during the pandemic as digital adviser and client led solutions become increasingly necessary to manage remote staff and client relationships efficiently and effectively.”
Wealth Insights managing director, Vanessa McMahon said she was aware of the discussion around further consolidation but noted that the platform sector had gone through many such exercises in the past when the likes of Skandia, ING and AXA were operating in the space.
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