Matt Heine speaking at the Netwealth Accelerate Summit 2024. Photo: Jack Smith

Netwealth’s acquisition of young Australian financial education platform Flux has signalled a move from the traditionally High-Net-Worth focused platform to expand beyond what has become an oversaturated market.

Netwealth announced last week that it acquired the digital content platform for $2.46 million to help its expansion into the mass market and target younger clients such as the “emerging mass” and “emerging affluent” client segments.

The platform’s Advisable Australia research report defines emerging affluent as wealthy, under 45 years olds likely to seek an adviser. There are approximately 1.9 million emerging affluents accounting for about $1.8 trillion of household wealth.

Shaun Ler

Morningstar equity analyst Shaun Ler tells Professional Planner this deal shows Netwealth will further expand into the mass market, having previously focused on the HNW market.

Ler says Netwealth’s traditional HNW focus is “facing increased competition from other platforms”. Netwealth is pivoting towards the mass market and mass affluent segments as a result.

“This shift includes targeting the mass and emerging affluent segments, spaces typically dominated by competitors. This reflects the previously commoditized nature of the platform landscape.”

As for a potential direct to consumer play, Netwealth said the acquisition will “extend the current reach of Netwealth products and services to advisers and licensees looking to deliver new services to younger clients”.

Ler believes that as of right now platforms like Netwealth are likely to still be mainly distributed through financial advisers due to the complexity of advice.

“Most users will likely still require the guidance of an adviser, as platforms offer more complex features than just investment selection, such as cash flow management and budgeting tools,” he says.

Netwealth may also want to avoid exposure to the compliance and regulatory issues plaguing the advice sector by dealing directly to clients.

The convoluted nature of the HNW market is encouraging platforms to move away from the space and towards these spaces. The platform market has become oversaturated  due to an oversupply of providers and a declining adviser base.

This acquisition was announced in the platform’s quarterly results to the ASX last week, but in a separate media announcement on Tuesday, Netwealth chief executive Matt Heine said the acquisition is a “natural fit” as the firm continues to expand its capabilities and reach.

“As part of the intergenerational transfer of wealth across Australia, which many believe to be more than $3 trillion over the next 10-15 years it is crucial for us to equip our adviser and licensee network with the tools to engage with these new segments effectively,” Heine said.

Platform benchmarking from Investment Trends earlier this found Netwealth just edged out rival HUB24 in functionality for HNW clients, but was still effective across all client segments.

Netwealth’s acquisition of Flux will allow the platform to engage with young adults, particularly in the mass and emerging affluent segments, and enable them to target a wider audience through the usage of digital content, including the Flux app and “What the Flux” podcast.

Flux also offers digital tools like budgeting calculators, credit score trackers, and monthly courses that range from “investing 101” to having “significant money conversations with your significant other”.

One comment on “Netwealth’s Flux acquisition points towards HNW oversaturation”
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    Thank you, Beata, for your valuable input. May I add that helping financial planners scale their businesses and enhance operational efficiencies aligns perfectly with addressing the challenges of intergenerational wealth transfer. With the financial planning industry currently experiencing its lowest adviser numbers in five years, the need for efficient business models is more critical than ever. Supporting advisers in streamlining their operations will enable them to better manage the significant intergenerational wealth transfer.
    By focusing on operational improvements, we can help financial planners seize this opportunity while delivering value to a wider client base, including the emerging affluent and mass market segments. Thanks again for sharing these insights.

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