The continued move towards unbundled advice is having a major impact on Australia’s wealth platform and product providers. While Netwealth and HUB24 are leading the pack when it comes to the new generation of platforms not owned by major financial institutions, ASX-listed Powerwrap is carving out an enviable niche for itself.

“Our big differentiator is taking everything a platform provider does and supercharging it,” Powerwrap CEO Will Davidson told Investor Daily.

“We have $1.4 billion in alternative assets across 350 funds that we administer. In this way, we act as a global trustee. We have 400 domestic and international bonds. We perform clearing, execution, settlement and reporting.

“What we built is what the Escala guys had at UBS. They had a global investment bank behind them and we built all these capabilities, things like options trading for example.”

This level of complexity may seem excessive to some, but the vast investment universe and fine-tuned processes are what Powerwrap clients want. Mr Davidson knows because he was one of them for years during his time as head of Australian fund manager Bennelong Wealth Partners.

“I look at the services offered on every other platform. I was a Netwealth user and a Powerwrap user. Every platform in Australia just wants to offer a vanilla retail financial planner service. The average account size on these other platforms is $250,000. Ours is $1.9 million. The types of things that wealthy clients want to invest in and the services they require are very different. We have private and hedge funds on our platform. We came in knowing there was no high net worth platform solution in Australia,” he said.

People and culture

Mr Davidson took the top job at Powerwrap two years ago. As a customer, he knew the level of service needed improvement. But first he had to build the right management team.

One of his first hires was James Edmonds as COO, who has extensive experience in investment banking, including senior positions at Morgan Stanley and Deutsche Asset Management.

Netwealth alumni Bruce McDougall came in as CFO, and former head of marketing and distribution at HUB24, Wes Gillett, completed the team as head of sales.

"When the business was created in 2009, it was originally intended to be an investment banking solution for high-net-worth clients," said Mr Davidson, who admits the platform has lost its way a bit and tried to be " all things to all people”.

Under his leadership, the company has now firmly returned to its roots and aims to become the wealth platform of choice for Australia's wealthy.

Systems and processes

Mr. Davidson knows that the biggest problem high net worth clients have is the limitations on their ability to invest in different assets. Powerwrap is a HIN based solution and wealthy, sophisticated clients have traditionally preferred to hold assets directly in their name. But the most important thing is to have access to more products.

“When a platform provider says they can't make an investment, the consultant has to do it manually. The adviser has to go to the fund manager and get the pricing, get the tax return, the dividends and distribution, the tax distribution. This is a much more difficult proposition. The client's accountant ends up getting a dozen tax returns,'' Mr Davidson said. “We do all of this in-house. We have that ability.”

Powerwrap has 85 employees, most of whom come from major investment banks such as UBS, Credit Suisse and Morgan Stanley. For Mr Davidson, people and processes are far more important than technology when it comes to running a wealth platform.

“Systems and processes are the key. The technology is easy. But the process around how to handle complex investment products is where you get the levels of quality service,” he said.

Powerwrap now manages $9 billion in assets, and the CEO believes the company will be profitable within 12 months. He said the level of investment needed to make the wealth platform financially successful was significant and one of the reasons the company raised $15 million through an IPO last May.

"Financial stability is the biggest barrier to new entrants. You have to get to about $10 billion before you break even,” he said. “It takes a few years. Netwealth did it. HUB24 [has] do it We will do it within 12 months.”