Company Interview / How platform companies are diversifying to support advisers | the advisory

Key points:

Reporting season reveals mixed results for platform companiesPlatforms like Hub24 and Net Wealth diversify to enhance advisor integrationM&A activity expected to continue among financially healthy firms

Andrew Whelan from Dash Technology Group provides an interesting overview of the recent reporting season, highlighting the mixed performances of platform companies like Premium, Hub24, and Net Wealth. He notes that while some companies face declining price targets, others continue to show strong results.

Andrew also explains that platforms are increasingly diversifying their revenue streams and client bases. Hub24, for instance, acquires multiple technology solutions to offer better integration for advisors. Net Wealth similarly invests in innovative services to stay competitive.

On M&A activity, Andrew expects more deals, especially for companies with strong balance sheets. For Dash, he mentions ongoing transactions and states that advisors are continually seeking holistic technology solutions to meet client demands.

Full unedited transcript below:

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Let's get to the advisory now. The dust settling on the August reporting season to give us highlights on how platform companies performed and how these businesses can combat slow growth or market dips. Andrew Wieland, CEO of Dash technology Group, joins me. So your report card, Andrew, on reporting season? Yeah, it's really, really interesting. Um, it's been a really interesting reporting season. So particularly if we focus on our listed brethren. So Dash where our platform much like premium and net wealth and hub and we've admired these guys from a distance for quite a while. So we keep an eye on how they perform versus the research. And what's been fascinating is uh, for the first time, I think in a really long time, the researchers have started to, uh, particularly on the sell side, uh, brokerage type, they're working with their clients and starting to weigh these guys as who have performed so well, you know, being a darlings of the ASX 200 over quite a period of time, they started to start to come off and some of their price targets are, um, well below sort of where they're

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trading, which has been a really interesting time for platforms that have been such, such good businesses for so long now. Yeah. Does that then mean that, um, you can see potential market to dip even further or. Well, there's probably a few things there. That one is um, you know, premium has been has a business that has mixed results over the last little while but has had its best year, a best month. So over the last month it's up 8%. Which is the best the best month in recent memory? Certainly that I can recall hub has had has across you know, I've researched 3 or 4, uh, brokerage houses and research houses that are reporting on each of these, and they're overweight in almost all of them because they're they've done such a good job for their shareholders, but they're starting to get to the point where they're really, uh, really highly valued, uh, and they're still up 16%, even in spite of this, sort of this reporting season. So that's a really impressive result for them. Um, and then net wealth itself has been flat. And so I think across these businesses you're looking at, you know, in excess of 10,000,000,000in market cap.

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So it's been a some of them are outperforming the research and others are starting to be, you know, impacted by some of the view. It's always about the outlook too though. And we spoke to hub 24 as well. I mean, what are you seeing in terms of the start of full year 25 and for your business as well? Yeah, so what we're seeing is and this is a hub has been probably on the forefront of this. So hub and ourselves have taken a very similar view over the last few years that even though platforms have been supported, you know, the status, something like 93% of their flows come from advisors that, you know, over the 20 years, platforms have been really well, uh, rewarded for staying disciplined, for staying in their lane. Uh, but hub and dash and even most recently net wealth have started to view themselves as more so they're looking to diversify their revenue streams, diversify their client base, uh, and reach deeper into the advisory practices How are they doing that? How are they diversifying? Well, so hub over the last couple of years has brought my

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my prosperity, which is like a client portal, an app. They bought class super, which is an accounting, uh, and they have the best data feeds in the market and it's accounting administration software. Uh, and recently, most recently, Net Wealth has bought, has finished an acquisition of a business called Zeppo, which is a financial planning as part of their data aggregation strategy, which is like a financial planning software service as well. So Dash is in a similar boat. So it looks like in particularly Harbour, Net Wealth and Dash are moving in a in a similar direction, trying to reach deeper into advice practices. So what does that all mean for advisors who used these platforms? Well, it's good news for advisors because what it should be less swivel sharing between, you know, their CRM and their workstation. And it should be more integration into the platform that they've used for so many years. So these businesses that they've supported for so much for so long, I think they're pivoting towards supporting advisors more deeply with, uh, better tech and different sort of technology solutions. And I think that's, that's a weird

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for the, for the industry. Do you think there's going to be M&A within the industry. Oh there's always M&A. So I think yeah always further M&A particularly um, particularly if the market is starting to reach all time highs, which it is. Uh, they're not going to any market leading to revenue isn't going to be supported as nicely by the ASX and and the indices. So they're going to they're going to need to continue to add value to their shareholders. So our expectation is that M&A will continue, particularly amongst the guys that have really strong balance sheets unencumbered by debt, you know, have shown have shown really good growth over the last decade. Um, are you looking at any M&A? No,

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we've been busy on the M&A as well front recently. So uh, we're we're we're in the middle of completing our transaction with integrated solutions. Yeah. Yeah. So that's almost completed. And I think we'll we might take a beat to just get our feet under the desk there. Okay. And just more generally, what are you seeing in terms of trends as we start the new financial year? Look, I think what we're seeing, generally speaking, is, uh, advisers are looking at all of their solutions more holistically. So what we're seeing through walk through our business is advisors and clients are expecting more technology from even the old names. Uh, so the client portals, client apps, client facing technology, uh, is is at the forefront of, you know, older businesses and newer ones like us. Um, I think also what we'll see is, uh, the, the, the larger players like your amps and insignias of the world, they'll continue to reduce prices to, to reduce the

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potential outflows that they might be seeing. And I think it's important to state that the CFS is insignias. And amps have actually done a pretty good job in trying to stem the outflows. So they they got hurt by the Royal Commission back in 2018. Um, and they've been working really hard since then with their client base to try to stem those outflows. And I think we'll we'll see some more competition from them shortly as well. Um, you talk about the technology impact. I mean, you can't get past talking about Nvidia, the big AI chip maker, which has been in the news this week, it's still the forefront the leader in AI. How much a platforms like yours like hub 24 premium using AI. So we're using it in terms. So everyone's always looking at AI to see if they can strip out some costs in the back end. So we're always looking in terms of can we reduce some headcount. Can we be more efficient. Can we be faster and better from an AI perspective? It feels like there's a long way to go on that front for us. But what we are seeing is advisors using it to replicate themselves, and may use our software to effectively put themselves in multiple

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rooms at one time. So we use it. We're seeing AI, the first wave of it to be put in front of clients, and the results are really in in the investors who are working with trusted advisors really enjoy AI avatars of their advisor, you know, delivering information so that they don't have to go in and park and drive into the office. So that's what the that's the first wave. And I think the second wave will be, you know, can big businesses invest in AI so that they can get some more operating leverage and increase results that way?