Mason Stevens has recruited former Iress chief executive Andrew Walsh as chairman as the wealth management technology and services provider gears up for an initial public offering.

Tim Yule, chief executive of Mason Stevens, said Mr Walsh had been appointed chairman of the company’s board effective from Tuesday after stepping down as CEO of ASX-listed markets technology firm Iress in July last year.

Mr Walsh, a 20-year veteran of Iress and founder of its Xplan financial planning software, joins Mason Stevens before an expected IPO this calendar year, which was foreshadowed by The Australian Financial Review’s Street Talk column in October.

A former UBS investment banker, Mr Yule said Mason Stevens was not listing to raise equity, confirming it had already secured $55 million in funding in a pre-IPO round from fund managers Ophir, Ellerston Capital, Fifth Estate and CVC Emerging Companies, alongside a handful of family offices.

Instead, he said the firm wanted to use the public profile generated through an ASX listing to increase its share of the lucrative $921 billion market for wealth platforms – administrative tech used by financial advisers and stockbrokers to execute trades and manage client assets.

“We’ve been profitable for over a decade,” Mr Yule said. “We’re debt free. We have circa $6.5 billion in FUM [funds under management and administration]. And we have EBIT [earnings before interest and taxes] in line with our listed peers.

“So we don’t have a burning need to raise capital. But we do have this groundswell of demand and … how do you support that growth? It’s really through a liquidity mechanism and a listing is an obvious place for that.”

Mason Stevens controlled just 0.7 per cent of the wealth platforms market, which is still dominated by ASX-listed giants AMP and Insignia Financial (formerly IOOF), as well as Westpac’s BT Financial Group, which has been for sale since at least late 2021.

But Mr Yule said the firm enjoyed many of the same characteristics that have helped competitors Netwealth and Hub24 increase their market share rapidly. Netwealth grew its FUM by 11.8 per cent over the year to September, while Hub24 grew by 15.6 per cent over the same period, according to researcher Plan for Life. Their share prices have increased 111.31 per cent and 141.6 per cent respectively over the past five years after the Hayne royal commission tarnished the reputations of incumbents.

‘You can’t eat FUM’

Mr Yule acknowledged that Mason Stevens still sat well behind the $50 billion-plus in FUM held by Netwealth and Hub24, and even the $20 billion held by challenger Praemium.

But he said his company had grown by 50 per cent last year and was on track to do the same in 2023. It had only employed full-time, in-house distribution for the past two of its 13 years, building a team led by former Netwealth chief salesman Nick Mitchell.

Another point of difference is a “chief investment officer” function led by Jacqueline Fernley, a high-profile equities strategist formerly at National Australia Bank’s JBWere private wealth arm. Mr Yule said this part of the business – which allows advisers to tap into bespoke research or have a Mason Stevens consultant sit on their investment committee – diversified revenue from “commodity-like” platform or tech fees.

But while he said the company was on track to grow quickly, he also said he wanted to educate the market that its focus on headline FUM may be outdated. “My late chairman [Pat Handley] was very famous for saying ‘you can’t eat FUM’. As a privately owned company, we’ve always been very focused on growing responsibly. And by that, I mean growing profitably and scalably.”

Mr Yule said he hoped to list the company this year, subject to market conditions.

In a written statement, Mr Walsh said: “Despite a turbulent year in global financial markets, Mason Stevens has achieved record growth … by providing its high performing and innovative platform with investment support and service to financial advisers and their end clients.”

Link to article | Aleks Vickovich is the Wealth Editor of the Australian Financial Review