HUB24 wins adviser market share even as financial inflows fall 15pc

Specialist platform provider HUB24’s net inflows fell 15 per cent during the fourth quarter but analysts say the company’s performance was ‘healthy’.

HUB24 chief executive Andrew Alcock.

Specialist platform provider HUB24 reported a 15 per cent fall in net inflows during the fourth quarter, amid a cautious sentiment in markets with higher rates, but the number of advisers on its platform jumped by the same magnitude.

Net platform inflows of $2.1bn for the three months to June 30 were 11 per cent higher than the previous quarter but lower than the $2.9bn flows for the June 2022 quarter, as economic uncertainty was impacting investor sentiment and driving outflows.

Investors had mixed reactions to the wealth advisory fintech on Tuesday, with shares trading up to 1.3 per cent higher before falling to close 0.93 per cent lower at $25.67 each.

The weaker inflows were due to outflows increasing 41 per cent to $2.4bn in the fourth quarter, ­according to Evans and Partners analysts that said first-half ­inflows of $3.9bn had been a ­“material miss” to the consensus expectation of $4.3bn.

But in the context of higher interest rates that are luring some investors into bank deposits and away from investment platforms, flow performance was “healthy”, said Cameron Halkett, an analyst at Wilsons Advisory and Stockbroking.

“I take it quite well really, particularly with elevated outflows and money not being put into the market or being held in term deposits off platform,” he said.

“But that’s also cyclical and ­arguably temporary. What you did see across all three specialist platform providers is very healthy inflows.”

HUB24’s listed competitors, NetWealth and Praemium, also reported healthy flows in the fourth quarter in recent days. All three platforms have been stealing flows from the incumbent players that have legacy systems, including Insignia (previously IOOF), BT, and Colonial First State.

“The core thesis to owning these stocks, that they are winning an above-average share from the incumbents, seems ­intact,” Mr Halkett said.

“They are all just feeling a cyclical arguably temporary headwind for the moment but still putting up pretty good numbers. “

Over 4000 advisers now use HUB24’s tech-fuelled platform, up from under 3500 a year earlier. Its footprint rose to 6.05 per cent of the market, up from 5.1 per cent a year earlier, to be the seventh largest investment platform. “Most advisers, once they have migrated legacy accounts, they just pretty much bring most new business onto a NetWealth, a HUB24 or a Praemium,” he said.

Of the three ASX-listed platforms, HUB24 had the highest exposure to super flows, which meant it was positioned more defensively than those that ­depended on discretionary ­investment, he added.

HUB24 said it had continued to invest in its platform during the quarter. It had added new data feeds and automation capabilities, enabling advisers to report on client’s off platform investments.