Industry ‘is responsible’ for wealth gap: HUB24

A lack of financial advice may have contributed to workers pulling more than $30bn from their superannuation accounts, the wealth manager says.

The wealth platform has been investing in technology to take advantage of changes in the landscape

The financial services industry, alongside government, has a responsibility to come up with a solution for the growing wealth advice gap that risks leaving more and more Australians ill-prepared for retirement, according to HUB24 managing director Andrew Alcock.

Speaking to The Australian after handing down the wealth platform’s full-year results, Mr Alcock questioned whether a lack of financial advice contributed to workers pulling more than $30bn from their superannuation accounts between April and mid-August as part of the government’s early super access scheme.

“I think as a nation we have to think about how we get access to advice efficiently. We have a challenge ahead of us, as manufacturers and as participants in the industry, and a social responsibility to solve that gap with government.

“One example is the early release of super. Did people access their superannuation for the right reasons? And if they had advice, would they have done differently?

“We’ve got to get this right. So I’m concerned. If the objective of our retirement system is to help people retire, and help them be self-funded retirees, then we all have to be concerned about that.”

HUB24, a wealth platform for advisers and investors, is helping to address the gap by making it more efficient for financial planners to give advice, Mr Alcock said.

“If an adviser has the tools to look after their clients more efficiently, that’s helping with that gap.

“If you were using managed portfolios on HUB24 through (the COVID-19 correction in March), you were able to rebalance your clients portfolios very quickly, all at once, rather than having to do client by client. That, in effect, is helping address that gap because the administration for the adviser is far more efficient.”

For the 12 months through June, HUB24 posted a net profit of $8.23m, up 15 per cent on the prior corresponding period as it increased market share and recorded higher fee income as transaction volumes rose through the COVID-19 crisis.

Underlying earnings jumped 60 per cent to $24.7m, while underlying net profit surged 49 per cent to $10.1m.

Platform revenue grew by 37 per cent to $74.3m, up from $54.1m the year prior, while platform direct expenses increased 36 per cent to $18.6m. Overall revenue increased 13 per cent to $112m.

The wealth platform has been investing in technology to take advantage of changes in the landscape and is focused on growing its market share from the current 1.9 per cent, Mr Alcock said.

HUB24 signed 105 new licensee agreements through the year, and an additional 441 advisers started using the platform, a 27 per cent lift on the prior comparative period.

Net inflows were just shy of $5bn for the year, a 27 per cent jump on the prior corresponding period, helping to push its funds under administration to $17.4bn. The platform is targeting funds under administration of between $28bn and $32bn by mid-2022 and grew by more than a billion, to $18.5bn between June 30 and August 21.

HUB24 declared a 3.5c per share fully franked final dividend, up 52 per cent on the 2019 payout, bringing its full-year dividend to 7c per share.

Citi analyst Siraj Ahmed said the result was a miss as he noted the better-than-expected start to the current financial year.

“Fiscal 2020 result was weaker than expected with platform operating leverage not coming through as HUB24 stepped up investment in the platform. However, 2021 estimate is off to a good start and the estimated fiscal 2022 funds under administration target, while in-line with Citi’s estimates, should also be taken positively,” he told clients.

Among the negatives were the lower than expected dividend -- Citi had been looking for an 8.1c per share payout -- and the pressure on platform margins, which declined 140 basis points, half-on-half, to 38 per cent, and was below his forecast of 40 per cent.

HUB24’s shares finished Tuesday’s session down 1.54 per cent at $15.33. HUB24 shares were on Monday changing hands at a record high of $15.57 a share.