Morningstar: Praemium has ‘strong growth trajectory’ in UK

Morningstar: Praemium has ‘strong growth trajectory’ in UK
Morningstar's president of wealth management solutions, Daniel Needham

Morningstar has labelled Praemium, the adviser platform it is in the process of acquiring for £35mn, a “challenger” in the UK platform market with a “strong growth trajectory”.

Morningstar's president of wealth management solutions, Daniel Needham, has been tasked with setting the strategy for the platform, which is being offloaded by its current owner due to its small scale putting it at a disadvantage to competitors.

Despite its small size, Needham said the UK business “has been growing quite nicely”.

“They've been dominating. If you look at the platform marketplace by incremental flows as a percentage of their assets, they're one of the challenger platforms,” he told FTAdviser.

“They've been growing at a very healthy rate, signing up advisers and increasing assets on the platform. So, we think they've got a relatively strong growth trajectory, and we're investing in that.”

As of March 31, 2022, Praemium held £3.28bn of assets under administration in the UK, making it one of the country’s smallest advised platforms, according to the Lang Cat’s latest platform report.

But compared with 15 other advised platforms in the UK, Praemium experienced one of the smallest dips in advised assets across Q1 2022, second only to 7IM.

It also experienced the largest year-on-year growth of assets of any other advised platform between 2021 and 2022, up 35.52 per cent over the past year. 

Such growth put it 16.6 percentage points ahead of the next fastest growing platform, 7IM.

Rival platform bosses such as Nucleus’ Richard Rowney have pointed to Praemium as an example of why scale is now essential to be successful in the UK platform market.

But Needham reckons scale should come second to technology.

“Praemium’s technology, we think, is really compelling and differentiated in the marketplace,” he told FTAdviser.

“Technology is really a tool to deliver great outcomes for the adviser and their clients, [...] so that's what we're focused on.”

The platform is built on application programme interface technology, which Needham said makes it a lot more friendly to integrate with advisers’ existing software stacks compared to some of its peers.

“The scale will follow. At the end of the day, advisers vote with their feet and if you're delivering a compelling proposition through technology that helps them do their job better, and great service, that will make you successful.”

Praemium is not the only platform to take a ‘tech first, scale second’ approach. Novia’s chief commercial officer, Barry Neilson, told FTAdviser in April it was banking on a microservices strategy to ensure it does not have to employ more administrators in order to scale.

Fellow platforms such as Parmenionand Aegon have also said they are working through backlogs of issues and requests raised by advisers in an effort to roll out more features and, specifically in Aegon’s case, to revamp their platform’s front-end.

‘Not as simple as having platform in US’

Advisers around the world are facing similar challenges, according to Needham, which fall into the broad categories of trying to grow their business organically, and trying to run an efficient business with flexible technology.