Quiet achiever Praemium's bid for wealth platform dominance

Quiet achiever Praemium’s bid for wealth platform dominance

Wealth management platforms burst onto the Australian financial services landscape amid the boom and bust of the dotcom bubble in the early 2000s. And ever since, observers have tipped that Praemium would make a play for its slightly younger and smaller cousin, Powerwrap.
“It has been at least 10 years coming and will be great for both companies,” Praemium founder and platform market pioneer Arthur Naoumidis told The Australian Financial Review in July, after the company he is no longer associated with finally initiated a $56 million takeover of its competitor.
Financial advisers – who are the primary customers of wealth platforms, using them to execute trades, manage assets and produce data and reports for clients – warmly welcomed the off-market acquisition, which was officially completed on Friday, with Praemium now owning 100 per cent of the shares in Powerwrap.
Even though it technically reduces the number of players in the $820 billion market, the additional scale the combined company has achieved will allow it to more effectively compete with market darlings Netwealth and Hub24 and the big bank-owned wealth managements – even though most of these traditional incumbents are being sold to third parties.
Advisers hope that consolidation in the platform market will actually boost competition and put downward pressure on administration and investment fees, thereby reducing the costs on the end investor (or increasing their own margins).