By Leon Gettler >>
PRAEMIUM is changing the world of finance and it has an enormous potential market.
Praemium is a platform and financial-planning software provider that also conducts portfolio services. With banks retreating from wealth services in the wake of the Hayne Royal Commission, the market for Praemium is growing.
Praemium started as an off-platform service in 2001. From the earliest days, it had data feeds with all the stockbrokers in the country and, using optical character recognition software in those days, it could see what the transactions would be and construct the portfolio, what it was worth, what its unrealised capital gains were and the level of franking credits.
“That is why we are the best at corporate actions and tax and finance reporting,” Praemium CEO Michael Ohanessian told Talking Business.
“One of our greatest strategic resources is we have every corporate action on every listed company in Australia since 1985. We’ve actually configured all those corporate actions from every Australian company into our system.
“And because we service the last two international investment banks that still do wealth here, and that’s Morgan Stanley and Credit Suisse, we also do that exact same thing for about 5000 international securities, all those American companies and European companies and so on. And with a data base of all their information, all their corporate actions automatically configured into our system, so that is how we started.”
Mr Ohanessian said Praemium did the reporting on 300,000 investor portfolios, including three of the four big banks.
He divided the investment landscape into Universe A and B.
Universe B was where the company would provide the information and the investor would take it to their accountant to work out what the tax was. Universe A was where companies like Praemium provided investors with the tax report that they provided for their clients.
Mr Ohanessian said working out what portfolios were worth was always a challenge, which is where Praemium has a distinct competitive advantage in the market place.
Praemium gave its clients the software to determine all the holdings and corporate actions. But for that to be correct, they needed to do the administration work to reconcile the data. That meant checking everything at all sources, from the registry to the bank.
“That’s the admin work that our clients have to do themselves to make our software 100 percent accurate, and therefore investment grade, and 100 percent right from a tax perspective,” Mr Ohanessian said.
“Then back in 2017, we started realising maybe we could do this for some of our clients and it’s just taken off.”
REMARKABLE GROWTH CURVE
Mr Ohanessian said in the last three and a half years, Praemium had gone from one client with a few portfolios to the market today, where 15 firms are using the Praemium service, with over 6000 portfolios and covering more than $16 billion worth of assets.
“For all those firms, we are taking away all of that pain of reconciliation and making sure it’s right,” he said.
Mr Ohanessian said this was a “game-changer”.
“We think the future potential is massive because every advice business out there has this pain and it’s inefficient for them – it’s not a good use of their time and it distracts them from what they need to be working on. And we are the best at operating our own software because we know it best,” he said.
Mr Ohanessian said because Praemium started out as an off-platform business 20 years ago, it’s in the firm’s DNA.
Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.