This week’s profile takes a look at Praemium, the Australian platform provider that saw 136 per cent revenue growth in its UK business in the second half of 2015.
Praemium launched in the UK in 2008 but subsequent assets under administration growth has been modest. It tells us, however, it has ambitious plans to grow its share of assets in the UK adviser platform sector and its AUA did increase by 35 per cent in Q4 2015 to £957.73m.
It also added £200m in new assets to the UK platform over the last 12 months (excluding in specie transfers). While these figures would be small change for some of the larger players it is a strong sign it is moving in the right direction. Praemium’s Australian business has also been growing, with funds under management up 47 per cent for the second half of last year.
Its proposition in the UK has four components:
- A white-labelled platform service
- An in-house investment manager providing risk-rated multi-asset portfolios called Smart Investment Management
- A “separately managed accounts” proposition
- A proprietary CRM system called Wealthcraft
The SMA was introduced to Australia when Praemium bought BlackRock’s Customised Portfolio Service and adopted its approach. SMA applies model portfolios to the individual accounts invested in the model. It compares weightings in the model portfolio against those in client accounts to establish the trades to bring them into line with the model. It aggregates trades for each asset class across all accounts and automatically updates them once trading is complete. This allows managers to implement strategy changes simultaneously across a number of client accounts.
SMA is core to Praemium’s play for on-platform model portfolio assets because it removes the need to re-balance. Its investment platform offers access to model portfolios from 22 discretionary fund managers. Advisers also have a choice of 345 models on platform.
Praemium tells us it prefers to work with a smaller number of DFMs where it is confident it can offer the right selection of funds. However, it is actively seeking to expand the range it works with.
Praemium receives praise from advisers using its on-platform DFM models, but some are frustrated by administration errors. In fact, this is the main source of criticism. The team says it is working to resolve this issue. We would encourage it to invest more in this area.
The platform’s ambition to increase its share of assets in the UK advised sector is undoubtedly a priority but it has also set its sights on growing its business in the Middle East. It already offers access to Sharia compliant funds and has a strong pedigree in offshore markets providing exotic tax wrappers such as Qrops and Retirement Annuity Trust Schemes.
The Middle East is a market being eyed by other platforms with global ambitions, so it will be interesting to see how competition for market share plays out.
Miranda Seath is senior researcher at Platforum