Superannuation, wealth management and other financial software companies could be among the biggest beneficiaries as Australia's superannuation system heads towards $3.7 trillion by 2029 from its current level of just over $2 trillion.
It's the fourth-largest and fastest-growing pension system in the world too.
Even capturing a tiny slice of that pie could mean monster profits for these companies. Here are some of the better-placed companies.
Link Administration Holdings Ltd (ASX: LNK)
Link is the big daddy of the superannuation software companies, with a market cap approaching $3 billion. It also happens to be the largest provider of superannuation fund administration services to super funds in Australia, as well as shareholder registry and other valued-added services. Link has an estimated 10 million superannuation accounts on its platform.
I was sceptical of the price at IPO (up to $6.37) and have been proven wrong with the share price soaring over $8.00 last month. Link will need to deliver though as the market now has very high expectations.
Praemium Ltd (ASX: PPS)
Praemium is often overlooked, but offers wealth management, separately managed accounts (SMA) and portfolio administration software. The company is growing strongly as we reported in February, and is expanding into SMSF administration. Praemium has more than 900 customers – servicing over 300,000 investor accounts. Praemium recently reported that its Australian SMA platform had passed $3 billion.
Class Ltd (ASX: CL1)
When it comes to self-managed super fund (SMSF) software, Class holds 17.5% of the market but is growing rapidly. Market leader BGL did hold 75%, but could be losing market share to Class. At the end of February 2016, Class had surpassed 100,000 SMSF portfolios on its platform and a small number of on-SMSF investment portfolios. According to the latest statistics from the ATO, there were 566,735 SMSFs at the end of December 2015, with thousands being setup every quarter. They also have around $600 billion in assets.
Onevue Holdings Ltd (ASX: OVH) after taking over Diversa Limited (ASX: DVA)
Onevue recently announced the merger with Diversa, which would give the combined company over $400 billion of funds under administration (FUA) within Onevuew's Funds Services, $3.2 billion of retail FUA and more than 75 clients. The company would also provide SMSF and non-SMSF software and services, and the combination should give it more scale to take on larger clients and generate more revenues.
And here are two bonus companies to keep an eye on.
Rubik Financial Ltd (ASX: RFL) and Hub24 Ltd (ASX: HUB) also offer superannuation and financial planning software. Rubik's prime product is Coin – which is used by financial planners to manage their client's financial strategy, but Rubik also offers other banking and financial solutions.
Hub24 has recently surpassed $3 billion in FUA – 84% growth over the past 12 months. The Hub24 platform caters for superannuation and investment portfolio management.
And here's one up-and-comer to watch.
Decimal Software Ltd (ASX: DSX) operates in the growing industry of robo-advice. That's automated financial advice to clients, offering much lower fees than 'real' financial advisors. The company is not yet profitable but has signed a number of deals with super funds.
