Xplore Wealth (ASX:XPL) - independent platform provider


by Rachael Jones

Xplore Wealth Limited (ASX:XPL) CEO, Michael Wright, talks about the benefits of the company's non-aligned platform following the Hayne Royal Commission and key priorities for FY20.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Xplore Wealth (ASX:XPL) is CEO Mike Wright. Mike, welcome to the network.

Mike Wright: Thank you, Rachael.

Rachael Jones: And Mike, as the new CEO of Xplore Wealth, what do you see as the strengths of the company?

Mike Wright: The thing that really attracted me to Xplore Wealth was this opportunity to bring all the businesses together. So, the group, Xplore Wealth, is actually made up of four businesses, the old Managed Accounts business, the Linear business, the DIY Master business, and the Aracon super trustee business. And the real opportunity was how do we bring those four businesses together as one to get the right efficiencies, saving, and offer to our clients, to really help take our organisation forward? And that's what's exciting me, and I hope that is also going to excite our shareholders.

Rachael Jones: Thanks, Mike. So, how has the industry evolved?

Mike Wright: Maybe it's useful if I talk about the waves of change. The first one was in the early nineties, with the establishment of master trusts and wraps. That provided a vast array of investment choices for advisors. It allowed advisors to have all their clients in one portal, and it provided timely reporting. But it didn't come cheap. The banks and AMP had the resources and the motive to create those platforms. In essence, they used their aligned advisors to manufacture their product.

The second wave was with the introduction of FoFA (Future of Financial Advice). So, there was a legislative requirement for advisors to act, always, in the client's best interest. Now, the interesting thing with FoFA is that the accountability set fairly and squarely with the advisor. So, rightly so, advisors had to assess. Could they meet the best interest test in a big institution such as a bank and AMP? And many felt that they couldn't, so they left the banks and they created their own advice businesses. And they also used independent platforms, such as Hub and Netwealth. And those platforms have grown significantly over the last five years, from 1 per cent market share to over 5 per cent.

But the interesting thing is, off the back of the Hayne Royal Commission, there's a new wave of growth and change. And that's what we call regulatory confidence. This wave is much more about how do you still provide one-stop-shop independence, however, how do you provide your clients regulatory confidence to ensure that the advice that they give is compliant and high quality?

Rachael Jones: So, what are the key priorities for the company now, and what are the opportunities for growth?

Mike Wright: The three priorities that we've articulated for financial year 2020 is that we are going to deliver on our One Platform program. In essence, we bring in all the four businesses together onto one platform, which will create real efficiencies and savings, which will set our organisation up, well into '21.

Mike Wright: Secondly, we're upgrading our business, our ambition, our culture, our business, and our strategy.

And finally, and importantly, we're looking to grow our market and grow our share. So, we have a take to market plan, which has just being finalised. One of the core components of that plan was expanding our total available market, and we've just done that with the launch of our retail super product, and also with the broadening of our super offer. So, we now compete in 52% of the total available market. We started at 1.1 trillion -- we can now compete in 1.7 trillion of the market.

Rachael Jones: Thanks, Mike. And to the last question now, what are the deliverables and milestones that investors should focus on to keep track of progress?

Mike Wright: I think the things to track us on are definitely our three priorities. So are we delivering on the various components of our One Platform program? We've just released our AGM presentation. In the appendix, there's 15 components to that One Platform program that people can track us on, they can hold us to account on.

The other one will be, clearly, our take to market plan and how do we grow our business, particularly our funds under administration? Again, we have a three point plan, three pillars. I think there's 20 items that we'll be delivering over the next nine months, to really deliver on our take to market plan.

And in terms of upgrading our culture, I think it's around the people that we bring in. I think it's around the strategic review that we'll aim to have finalised before the half year results. But we'll be a very trackable organization. We want to be tracked, we want to build confidence, we want to build belief, and so that will be clearly laid out at all our quarterly updates.

Rachael Jones: Excellent. Mike Wright, thanks for the update.

Mike Wright: Thank you, Rachael. Appreciate it.


Forward looking statements:

This presentation contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements of the Company to be materially different from those expressed or implied in this release including, amongst others, changes in general economic and business conditions, regulatory environment, results of advertising and sales activities, competition, and the availability of resources. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation. Except as required by law, the Company assumes no obligation to update or correct the information in this presentation. To the maximum extent permitted by law, the Company and its subsidiaries and officers do not make any representation or warranty as to the likelihood of fulfilment of any forward-looking statements and disclaim responsibility and liability for any forward-looking statements or other information in this presentation.