Netwealth Group Limited (NWL) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to Netwealth Group Limited Full Year Results for fiscal year 2026. [Operator Instructions] I would now like to hand the conference over to Mr. Matt Heine, CEO and Managing Director. Please go ahead.

Thank you very much, and good morning, and thank you, everyone, for joining Netwealth Group's FY '26 financial results. We've got quite a lot to cover today, so we'll jump straight into it. But thanks again for joining. This financial year or last financial year, I should say, was a true [indiscernible] year in many ways. And as has been well covered, particularly at the half year results, on the one hand, we had the First Guardian matter, which was pleasingly resolved in late December. And more importantly, on the other hand, we had a very strong and successful financial year. If we turn to Page 7, you'll see some key financial results, which I'll walk through quickly. For the financial year, and I should also mention that the numbers are adjusted for the impact of First Guardian and that could be seen in detail throughout the deck. From a net flow perspective, starting off with the net flow number [ expension ]. It was a very strong year of $16.9 billion and including pension outflows, $15.4 billion, which was marginally lower than the prior financial year, but still an incredibly strong result. We finished the year with record FUA of $135.7 million, up $22.9 million or a 20.3% increase. And by way of an interim update, FUA funds under administration on the 21st of August, was $138.8 [ million ], which represents net flow of $2 billion, which does exclude $600 million accounting for 2 large institutional accounts, low margin, which were refinanced elsewhere. So again, a good start to the year and sets us up well for our forecast. Just to reiterate, our guidance for FY '27 is to achieve net inflows of between $18 billion and $20 billion, and we reaffirm that today. Total income for FY '26 was $391.1 million, an increase of $66.7 million or 20.6% change increase. Adjusted EBITDA $192.9 million, a $29.5 million increase, 18% and also pleased this morning to declare a fully franked Duncan dividend of $0.21, which gives a fully a franked dividend for the financial year of $0.42, an increase of $0.035 and an increase of therefore, 9.1%. So again, a good year for increasing income as well as continuing to drive strong profits. On Page 8, you'll see how this converts. And again, we've had a very successful year of not only raising funds and growing our funds under administration but also increasing our total income as per previous slide by 20.6% and resulting in an adjusted EBITDA margin of 41.1% as guided. So that does represent an increase to the underlying or adjusted EBITDA in absolute of 18%. On Page 9, you'll see how this actually played out throughout the year. So these numbers are derived from plan for life and do go to the end of March, but tell a consistent story. The 2 leading platforms ourselves and one other accounted for about 80% of industry net flows. And this has been a number that's been very consistent now for a number of years. Importantly, we are approximately 5x higher from a net flow perspective the #3 or 4. So we have got significant market leadership. And as I mentioned, from another have around 80% of the total net flows of the industry. Interestingly, when you look at the market share and the market share changes in particular, there was only 2 platforms over the 12 months ending 31st of March that actually increased their market share so net worth moved to 9.7% of the platform market, and we'll come back to that during the presentation, an increase of 1%, whereas others are stayed flat or went backwards and our legacy platform. So likely, those are sitting above us in the chart, collectively actually reduced market share by 2.2%. So again, to a very consistent story and one that gives us great comfort in our future growth prospects and also in our forecasts. A big part of, I guess, the ongoing success of the company and the adoption by a broad range of advisers across the industry, is that in FY '26, we again executed extremely well on our strategy, which has now been the best for a number of years. On Page 11, whilst I'm not going to go through every single one of these items, you can see that under each of our key pillars, that is to accelerate the capacity to compete in scale, both for advisers and also internally. We delivered on a number of very important initiatives for ourselves. Probably the major initiative here was a significant uplift to our managed account infrastructure, which has been a major project that's been underway now for a couple of years and gives us incredible scale moving forward as well as a lot of additional capability, which is being rolled out. [ Menticounts ] continue to be a major driver of new business. And you'll see that in the preceding slides. We also drove a lot of efficiency through things like workflow track our digital onboarding and [ Dental ], which we'll continue to invest into for the benefit of both clients, advisers and also network efficiency. The 2 key parts of our strategy, though, and no doubt we'll be very familiar with these is that we are very focused on making sure that we leverage our core technology, our foundational technology to accelerate our share of affluent advice so that is typically your mom and dad, $500 million to $750,000 if not [ $1 million ]. We're advised sort of servicing a very important segments are looking for ultimate efficiency. So how can we help them drive better adoption the tools that we offer, but also help them service more customers, but importantly, without degrading the quality of the advice that they provide all the services that they provide. And this is really important that we'll keep referencing back to this repeatedly throughout this presentation, but also over the next couple of years as we continue to build out strategy, which is we do have a pathway for those that are wanting to come on the journey with for advisers to service more than the current 123 clients that they do. We can see that very easily go to 150, potentially even 200 or more in the future. But again, just to reiterate, that's not at the degradation of service or advisers. Actually, well at how do we improve the service they provide we provide [indiscernible] and also the [ P2 ] service more customers, which is [indiscernible] important given the other supply and demand. So affluence continues to be extremely important, and we have had a very successful year in that space. Equally, through our Private Wealth and Stockbroking segment, again, leveraging our core capability in core platform technology. We've delivered on a number of major initiatives, the 2 big ones being the launch of our individual in service which unlocks the broking market. It allows investors and advisers operating within the broking market to really benefit from all of the capabilities on the network platform that we've built now over decades and a bit, including bonds, structured products, managed accounts, [ Assi ] equities, international equities, but combine it very neatly and integrated with the individual in offerings in partnership in conjunction with [indiscernible] a very significant part of the broking market in the percentage of around 70%. So we are very excited we've launched that product, and there's a lot of really good conversations going on across the market in the industry. We also launched our Netwealth private product. And again, this has been a really important milestone for the business as we continue to differentiate between the affluent product and the private wealth product. As a starting point, I actually very common functionality and capability, but we see that capability diverging over the next couple of years. We add more and more sophistication to the network private product. The feedback of the market has been extremely positive. And again, we'll to great conversations happening both with existing and also new customers. And we continue to expand the investment offering. Sitting above these 3 pillars, and these really do, I guess, underpin the whole strategy is that we remain very focused on operational and service excellence that is both making sure that we deliver outstanding service, and that's everything from reducing call back times to quality of administration through to also being up to scale efficiently internally. The other really important part is that we know and we can see and we've demonstrated that our investment into clearly differentiating our product range and our services means that we are getting access to significantly greater and expanded number of opportunities through both our existing pool market as well as the new markets, including the broking one, which I've touched on. So a great year, lots done and the team executed flawlessly. On Page 12, just a bit of an example. I know that many of you are keen to see how it all actually comes to life. But one of the key points I did want to also raise is that whilst we continue to step up our investment in our product and tech teams, and we see this as a key advantage and a key differentiator for the business. It's really important that we also take a very disciplined approach to making sure that, that investment goes into scaling our core infrastructure, our scalability and security, but also delivering fantastic new capability at the front end and a great user experience and the screen shot that you can see in front of you on Page 12. It's just an example of some of the new portfolios granted coming to market in the next 4 to 6 weeks which are really not only feature-rich, but provide a lot of information, both visually as well as through tables to help advisers again, be more efficient to help customers really understand what's going on in their portfolio. And what I'd like to always talk about is to help advisers and their customers actually understand their strategies that are being put in place for them. So visualizing the impact of whether it's the investment decisions or the tax structures or the contribution strategies they're putting in place, and we'll continue to really bring to life a lot of our strategies and the visualization as well as making sure that it's a great user experience. It's in an incredibly stable base. Equally, we have continued to execute and to invest into diversifying our revenue streams. And on the previous slides, you would have seen a number of these in addition to things both in individual [indiscernible] products in our private product. We launched our bond trading desk during the year. We continued to enhance our international trading solution, introducing capabilities such as VWAP. And that's all really starting to flow through on the revenue lines, which you'll see on Page 14. Equally, jumping around a little bit. Back to Page 13, you can see the strategies that we've actually employed have also made sure that those key markets that I touched on before [indiscernible] and private wealth are continuing to grow, and we're seeing a really good diversification across all of those key client segments and good growth in the areas that we're investing. So again, very pleased with the outcomes of our investments. And also it is great to see that our [indiscernible] product as well as our investment in private wealth continues to see really strong support with a total superfund value now of 45.2% for at June 30. On Page 15, another slide, but we're very pleasing to see from the recent investment trends technology needs to report is that versus market. And you can see the last couple of years detailed at the bottom net worth share of wallet. So that is advisers using Netwealth as their primary platform sits at 78%, which is actually above the market numbers of 73%, which have been very stable across the industry. So what that really means is that the customers that use us are using it for far more of their new customer money as well as existing customer money and the trend is really pleasing to see and so one that we'll look to continue to expand and grow upon. Important to note that whilst we'd love to see 100%, it's also unfortunately not a realistic number. There's a lot of M&A activity in the market. So we're seeing diversification of platforms where they're buying legacy platforms, we said then moving across to us and you've also got legacy issues such as sort of tax and [indiscernible] issues, which will mean that whilst we'll never get to 100%, we'll certainly continue to really look at growing that number of our primary platform share wallet. Moving across to Slide 17. So admittedly early days and you may have had a chance to go through the announcement in a lot of detail but we are pleased to launch our new strategy for FY '27. And more importantly, for the next 4 years. So we have previously launched the concept of our ambition. And again, just to stress it is an ambition, not a forecast to double our funds under administration by 2030. That is what we've called our [ X30 ] strategy, so doubled by 30. And we have a great level of confidence in achieving that strategy and that ambition because some of the areas will talk through. The first is, and we've sought to quantify a lot of this for you is that whilst we've talked about market share platform being the number that we looked at before. The platform market is only really one part of our total opportunity set. And when you look at the total opportunity set and the areas that we're investing into and the products that we're bringing to market, it really is about expanding into many of the areas that you see on Slide 17 in the dark green. So that's where we compete today, and that's the untapped TAM that we believe is available in the future. When you look at these various sort of parts of the market, we actually only really have approximately 2% market share. So plenty of runway and plenty of opportunity and gives us, again, great confidence in our [ X30 ] strategy and work well beyond. Interestingly, if you haven't done the math to get to double our pool up by 2030, that represents a CAGR of approximately [ 19% ] which is a combination of net flows FY '27, our guidance of $18 billion to $20 billion and also market movement. So that currently tracks at 5%. Doing that, though, we do need to keep investing, again, an area that we talked about, and we've guided to margin for FY '27. There's a range of capability that we need to keep bringing to market and to working through. That is the things that we've already talked about. So workflow efficiency our AI-enabled capability. We're really pleased to launch our first January [indiscernible] AI, [ ChapotNova ] throughout the course of the year and also long self-service capabilities to helping advisers find information quicker and easier enhance workflow tools, et cetera. And clearly, we need to be able to keep investing into bringing broader products to those key market segments that we've touched on. One of the other key areas of our strategy, which again differentiates us and we believe is really important. You can see on Slide 19, we've deliberately tried not to delve into too much detail around individual product features. But what you can see here and hopefully start to make a lot more sense is the focus on [indiscernible] that we've been investing into for a number of years and that ecosystem play really sitting on and being grounded on our unified data management platform. So unified is a business that we bought 2 or 3 years ago, it's called [indiscernible]. We've rebranded that and really so strip it back to its full capability which is an intelligent data management platform that connects to 32 enterprise solutions and aggregate matches and organize information across the ecosystem. Why is this important? We know that advisers in the industry, particularly where they're multidisciplinary, so operating costs, wealth accounting and debt, that there are multiple systems sitting in their tech stack. Many of them don't talk the disparate data silos within their businesses. So being able to bring together and connect all of those different data points and consolidate the net claim Data Lake or the other warehouse to then push up into the various things that we're doing and other systems that they use is [indiscernible] important. We're seeing great responses from those using the system, and we continue to evolve and also invest into the reporting and the insights that practices in multi-different firms as well as license fees are able to get from that unified data set. As mentioned, that sits at the foundation of the core of a lot of our other product development. Clearly, the adviser platform is our core business and continues to be the key financial driver of everything we do. But we're also investing into and bringing more product features into our client portal. So again, the stat is very strong, circa 65% of the industry is looking for a portal or using a portal. And that's really driven, in many cases, not only by a great customer experience, so we need to deliver a digital experience to their customers in a branded environment but also solving for probably the industry's biggest risk, which is cybersecurity. So through the client quarter with new capability being brought to market in the next 4 to 6 weeks, advisers will be able to connect into [indiscernible] that we have to share documents security, they'll be able to chat live with their customers, all in a secure branded environment that is connected to the Netwealth ecosystem and naturally works extremely well with the adviser platform for things like digital consent portfolio, life portfolio updates as well as news and other services. [ Advice tools ] will continue to evolve and we offer a range of advisers already on the platform. We are actively investigating and looking at a whole range of [indiscernible], which we can help enhance the overall adviser experience. Again, generative AI from what we're seeing is really changing again when it comes to things that maybe even 12 to 24 months ago, we may have not considered being part of the broader platform set. ROAs, file note tools, all of those things we are actively investigating and looking to invest into as part of the broader ecosystem and licensee solutions just make it really easy for them to work with us and to understand what's going on in their client basis and give them better access to not only or tapping across the platform, but also more across the whole in leveraging the unified data. So we think this is a really exciting strategy. We're getting great feedback on it from the market. And more importantly, it really does differentiate what we're doing against our competitors, particularly the legacy platform. So we're still staying very narrow in their focus on just the platform pace. We believe the platform can and should do a lot more when looking at all the different jobs that need to be done across an advice firm, and that's where we'll keep investigating and investing. Coming to AI. It wouldn't be a full year result presentation without talking about AI. We're also conscious that there is a lot of discussion about AI. So we are very keen to actually give some very tangible outcomes in areas that we're seeing the benefits. On Page 20, we are basically detailing what our strategy is for AI. Not surprisingly, it's around growth, it's around productivity, and it's around scale, Again, I'm not going to go through all of these individual dot points, but looking at the dark blue boxes, you can see some of the actual outcomes that we're seeing and that we've been able to deliver as a result of generative AI and AI more generally. [indiscernible] talked about. [indiscernible] went live about 2 months ago. They generally on [indiscernible] for advisers. In the first month, it was already between [ 15% ] and 19% for incoming inquiries, basically just to up our knowledge base and some of the government websites. We will continue to connect that to more and more data sources in the South and [indiscernible] and allow advisers to find that and then cover more about their customers in bias through that channel. We're also seeing large scale benefits just internally as we sort of automate and new start of extraction and data management tools that can be automated good process. We're seeing very significant like all companies, our productivity gains from the introduction of [indiscernible] across all staff and something that I'm using active on a daily basis without many of our being. And we've also recently in the last month, appointed our first Airbus General Manager of Data and AI, who comes from very significant Australian companies with a fantastic skill set and capability across very large data sets and they're an stuff into a whole range of different opportunities and projects. So an exciting time. Again, we have seen tangible outcomes from AI. We are investing heavily in AI, and we are using AI where it makes sense and also making sure that we manage any costs associated with AI very carefully. Corporate sustainability is very important to Netwealth and a key part of our culture and our values. Again, it's been a very busy year and a very productive year for our sustainability team and also from a giving and community perspective. There's a lot of information there, which I won't go through now. We continue to be extremely proud of our partnerships with these -- the companies that we have got listed there. Bankrupt financial literacy program continues to grow rapidly across the country. And I believe more recently, we've put through more than 160,000 children in that program, which is outstanding. [ Richard ], the center for financial -- for women's safety, all fantastic charities and ones that we're very proud to support. On that, I'm going to stop talking. I'm going to hand over to Hayden Stockdale, our CFO, who's going to give you some more color and detail around the financials. Hayden?

Thanks, Matt. Yes, thanks, and a warm welcome everyone as well. Now to start off, I just want to reiterate what Matt said earlier. And that is, this has been a very positive year for us from an operational and financial perspective. But I think also a year where we've taken important steps to resolve that First Guardian matter and how it affected members. And to that end, while the accounts have been impacted by First Guardian, we have actually covered that in some detail 6 months or so ago. So given its unusual nature, we've excluded it from all of the underlying financials that we presented today. And I won't really be covering it in any further detail. So let's start off with the financials on Slide 24. Now I think the headline story for the year here is actually very similar to that previous years. which is that our broad-based momentum continues to just roll on across all of our business. And as you'll see here, we delivered [ 20% ] growth in total income to over $391 million and that was driven by growth in all 4 of our major revenue streams. So total filler, which drives our admin fees was up 20%, funds under management, which drives our management fees was up 28%. Cash which drives our ancillary fees was up -- sorry, 14% year-on-year, and trading volumes, which drive our transaction fees were up 21%, too. We're also driving greater productivity and efficiencies for our customers. with account growth outpacing adviser growth by 12% to 6%, meaning our advisers are getting more efficient as we deliver them more functionality. And it's also worth noting here, too, that every single one of the metrics on this slide is actually at a record level. If we turn to Slide 25, you'll see we also delivered record gross store flows for the year of over $32 billion, with gross flows remaining actually quite solid into the fourth quarter, too. So as we reported 6 weeks or so ago, our net flows actually softened slightly following the federal budget. But we do believe that's temporary. The financial assets remain advantage as compared to property as an investment class. And certainly, the $2 billion of flows that we've experienced in the quarter space, I think give us cause for continued optic. On the right-hand side of this slide, you'll see that net flows from new financial [indiscernible] grew from 6% to 10% of total net flows which in dollar terms for FY '26 were up over 70% to more than $1.5 billion compared to less than $900 million the previous year. And that's actually really encouraging because flows from intermediaries are typically a key driver of ongoing flows for several years to come. The other point to note here, too, is that most of those new intermediary net flows actually did come in the third and fourth quarter of the year, including post budget. So they're not really fully run rate in that number. We're turning on to Slide 26. Here, we show platform revenue for FY '26 was up 21% year-on-year. And as I noted earlier, all major revenue streams were at record levels. And specifically, our revenue base is also now more diversified. Within our revenue mix, ancillary fees benefited from a full year of higher cash margins while organic growth in our management fee was a standout again for the year. In fact, at the end of the year, funds under management represented over 25% it is about 25.5% of total [indiscernible] compared to less than 24% a year earlier. That trend continues still to be very strong for us. Okay. Let's flip to Slide 27. As I said earlier, one of our key growth drivers has been a number of accounts and how the EBITDA pace growth in our adviser base, many advisers becoming more efficient. But not only are our number of advisers and accounts growing to the store and the revenue we're generating on each account is also growing and now I [indiscernible] stand at record levels as you can see. So average bill per account is now over $700,000 with average revenue per account over $2,000 with this last metric being a real key sell weather with growth hygiene grows. Now as accounts growing [ 5% ] and as we add a larger proportion of 5 balance accounts, the combined effect with fee tiers and caps means that full growth is actually slightly outpacing revenue with the resulting revenue margin that you see here at 30.7 basis points which we feel very healthy. I'll turn to Slide 28 now and a little bit about our operating leverage and investments. But I think we've proven in the past that we can grow well. And as we do so, we're getting the benefits of the scale efficiencies but to put some numbers to this, you'll see on the chart here on the left-hand side, but over the last 2 years, we've generated 135 basis points of operating leverage from our delivery sales and G&A functions. And then we've invested the bulk of this into our live projects as well as product and tech to drive long-term growth leaving us with a net 45 basis points of EBITDA margin improvement. Also noting that we're quite conservative in fully expensing the vast bulk of our cost and tech investment. If we want to isolate just the numbers for FY '26, I've included those in the narrative on the rise. And the patent there is actually very similar. So our incremental investment in product and tech was about 100 basis points of margin. And in sales and marketing, it was around 10 basis points as we added [ 0.50 billion ] while we actually got just over 50 -- about 55 basis points of efficiencies, the cross out delivery and G&A functions. So I can color there, we're actually getting operational leverage in all the areas you'd expect, while we're limiting investments to only those areas that are either generating long-term growth or that are required for regulatory governance purposes. Now the net impact of this is that we're delivering strong returns to our shareholders, as you'll see on Slide 29. Adjusted EBITDA is up 18% to almost $193 million with an EBITDA margin of 49.1%, which is [indiscernible] in line with our guidance. And I just want to note here, too, that the transparency of our accounts is really highlighted in the conversion of EBITDA to pretax operating cash which, again, similar to last year was greater than 100%. Our earnings per share rose 16% to [ $0.55 ] per share with dividend of $0.42 a share for the year including a final dividend, as Matt noted earlier, the [ $0.21 ] that the Board is here today. And then finally, I'm told we have the second highest all of 40 in the ASIC at almost 70% which is a really strong testament to both our growth and our margins. Okay. I don't propose to go through Slide 30 or 31. But I'll close out on the slide 32 if that's okay to the summary. So bringing it all together, we're scaling, we're diversifying, investing, and we're earning. We've got strong growth in -- sorry, strong growth momentum achieving record levels across all our key business driver metrics. We're leveraging adviser and account numbers into outside [indiscernible] and revenue growth with an investment program that's driving it by the productivity and also assisted by structural tailwinds. We're adding new adviser relationships at pace and we expect to underpin solar flows for several years to come. We have a 2% market share of our TAM as Matt noted, with plenty of growth opportunities ahead. We've outlined an ambition to double our FUA over the next 4 years. We have the confidence to support our guidance that we've given for [indiscernible] growth in FY '27. We've delivered on a set of results, which are in line with our guidance. We've proven our operating leverage over many years now and have delivered that again this year with deliberate and well-flagged investments in growth. We convert every dollar of EBITDA to cash, and we've increased our total dividends for the year. And all that we feel extremely high than that [indiscernible] of the growth in margins, which is all metrics. So on that note, I'll pause Paul, and I hand back to Matt.

Thanks, Hayden. To avoid reiterating or going over what Hayden simply just went over then. From an outlook perspective, I would just reiterate though that we remain extremely excited about the opportunity ahead of us and also more importantly, the structural growth tailwinds that sit behind us. There is a huge opportunity in the market. And I believe we've done a great job executing on the strategy to make sure that we maximize our growth in those areas and there's numerous fruit points now that we can point to around where the investments that we've been made is actually delivering results. We're also continuing to invest into the growth, and we believe there's many opportunities to only drive significant efficiency for ourselves and for our advisers, but also to bring exciting new products, which will differentiate us in the market to our peer group. Finally, on Page 35. We reiterate our FY '27 guidance. That is net flows or FUA net flows of $18 billion to $20 billion. And EBITDA margin, excluding any First Guardian large expenses of approximately 47% and capitalized software investment of approximately $17 million. Our FY '30 [ DX30 ] strategy continues to excite us and the team. And just to finish on that, we do believe we can double it on the platform in the coming 4 years. And over those 4 years, return operating EBITDA margins towards 50%. So on that, we will stop and take any questions from those listening. Thank you very much for listening.

[Operator Instructions] Our first question comes from Elizabeth Miliatis with Macquarie. Please proceed.

The first one is just on flows. Obviously, you sort of included the flows year-to-date in the last 6 weeks or so. They do seem a little weaker than where we were last year. Obviously, the budget is still impacting things. Do you have any strong view as to when this weakness will subside? Are there any green shoots? And what's your view longer term? Obviously, you've got those FY 2030 target. So hopefully, a decent amount of conviction that things will come back pretty strongly.

Yes. So I think the first thing to comment on is that it is only 6 weeks into the year, and I think that is important to note, excluding the large or the 2 institutional accounts $2 billion is actually not a bad start. And we'll just go to pay again just to reiterate our FY guidance for $18 billion to $20 billion timing is something that is unfortunately a little bit out of our control. But certainly, we've got good line of sight of what's coming through. And we're still confident in that guidance. There's always going to be things going on in the market, but I think it was more but once upon the time said. It's important to look at the climate, not the weather. And from time to time, you will get accelerated transitions and some of the delays as well as new business. But yes, we're very confident in the flow outlook.

Yes. And to add to that, Liz. Look, I'm not overly disappointed by the number at all, halfway through the quarter, you doubled 2 and make it 4. Thing of the guidance. The guidance is averaging $4.5 billion to $5 billion a quarter. You wouldn't expect us going from [ 15.5% to 18 to 20 ] to be doing 5 from the get go. So the number that we've achieved here, I think, is actually quite reasonable and is in line with the guidance we've got the full year.

Okay. Got it. And then maybe a second one for me. Obviously, you gave us an update about a month or so ago on Morgan Stanley and signing that contract. Just curious as to how that's progressing? Are we starting to see any flow benefit from that? And then also maybe with regards to the longer-term targets for store and flows. How much of tha it captures Morgan Stanley roughly.

Yes. I'm not going to get in the habit of commenting necessarily on individual customers that we have called this one out. What I would say in the first 6 weeks of the year, there will be probably a handful of accounts that have come across. But we obviously expect that to ramp up as we sort of work with them and look at which clients we move across. But equally, moving forward, it is a loan, we've got a lot of very significant accounts across all of the segments. We're working really well with the aggregators as well as now the broking community and the pipeline remains very full.

Our next question is from Blake Dowsett with Jarden Group.

I just had a couple of questions on the Morgan Stanley flows. Just -- I know it's a little bit out of your hands, but just trying to understand how the cadence can look throughout the year. I appreciate that you gave us a little color on that beforehand but just helping from a forecasting point of view, do we expect this to be back loaded or front-loaded in terms of how the BMS is going to drop through?

Yes. Again, probably a comment longer term on individual customer flows, but we expect to see that coming through this quarter. [indiscernible].

But there's ramp-up with all the [indiscernible].

Exactly.

I would say it's manageable today.

Correct.

Yes. Just thinking about that client or more generally, just on the broker-dealer channel, if you don't want to talk specifically about an individual client. I'm just trying to understand the revenue margin of that [ Broker Hiller ] channel in relation to the revenue margin of the existing custody book of business, whether we should be expecting any impact of that as it flows through the year.

Yes. So existing broker opportunities. It's exactly the same margins as our order book. Moving forward, there's a range of different business models that we have different margins attach them. So I know that doesn't necessarily answer to your question, but we some groups where they will be looking for reporting only service, but we have some gross where they're looking for a fully integrated trading solution. And each of those different models will have slightly different sort of revenue [indiscernible] What I would say, not with trace reporting only. So any sort of broker opportunity will be standard margins plus the incremental benefit of any individual thing reporting that we provide them. So it should be an incremental play in major cases.

Yes. And what I'd say to that, Blake, is I'd just be cautious around the revenue margin as a metric. It is an outlook metric. It's not an import metric. And directionally, whether it goes up or down is not necessarily a positive and negative side. As I said, the bellwether for us is more revenue per account. And we are expecting that revenue per account number to continue its trend, which is upwards.

Yes. And real basically, that's heading a great revenue number per account.

And that's the input metric.

[Operator Instructions] Our next question is from Nick McGarrigle with Barrenjoey.

Okay. Just another one on the flows. Can you talk through what you're seeing on the ground in terms of the gross flows are growth still running at a decent pace compared to last year, and we're seeing some of the IDPS larger parking money on platform as they await more clarity around tax and investment strategy?

Yes, I think that's a fair characterization. There's still a little bit of choppiness around some of the outflows. And we do believe there's range of positioning that sort of sits behind that. Sometimes these are seasonal. So pre 30 June, you get a little bit of tax positioning and the like but we have in the fourth quarter as well as continuing to see we've called it out with a couple of large institutional outflows in the quarter. A little bit of that choppiness. Now we are, I think, also expecting the Board out our way a little bit more so than it's our [indiscernible] over the last 6 weeks or a quarter or 2. But I think, yes, that's a fair characterization.

And I think if you're using gross flows is a, I guess, an indicator of growing support in yes, gross flows continue to grow.

Okay. And I assume just to dig into the guidance for $18 billion to $20 billion the current annualization and it's always dangerous annualizing 7 weeks, but that gets you to kind of $14 billion. Is it fair to say that you're assuming something in that range of $5 billion from Morgan Stanley. over the year that bridges that difference between kind of the annualization of where we are now and the '18 '20 guidance?

I know everyone's desperate the answer to that, but I won't answer that.

Okay. Does that count as my question because it was brief.

You can have another one. I think you knew what the bloody answer. That was going to be.

Okay. All right. Good. Yes, in terms -- maybe just to dive into the EBITDA margins, and you've obviously can you just detail maybe some of the deliverables that you're expecting to get with the incremental EBITDA margin investment that you've made in the business over the last 2 years? Like what do you think coming into '28 and '29, you'll have to kind of show for that? And then how that then delivers the trajectory back to 50?

Yes, absolutely. Look, and there's a big revenue effect here, right? So we have circa 2% market share, circa 50% margins and circa 20% growth. And when you look at that, we should absolutely be optimizing for growth and that's what we're doing within region. And hence, the strategy that brings some more funds into [indiscernible] and also sales and marketing to drive that but we are expecting very strong returns on that investment. In the world of software, it can be very hard to attribute revenue to particular investments. But when we can do that, and we actually [indiscernible] are, they're extremely attractive. You're talking typically sort of north 100% but the issue is that the payback period is seat 2 to 3 years, which means you do get a little bit of compression in between year 1 but then fairly quickly, the revenue starts to land and then dilutes the impact of the expenses from the [indiscernible]. So look, we're not giving a trajectory as to what those margins will look like other than to say what was risk-rating guidance, which is trend back over that sort of 4-year time price.

Yes. We've given a lot of data parts there as far as what we're looking to achieve. And there's a whole range of things that we're investing into is I touched on a lot of them. But reporting, continuing to enhance that sophistication, mobile and mobile connectivity, the ecosystem human private, there's plenty of things that we're investing into that we know are going to keep driving adoption and growth.

Our next question is from Simon Fitzgerald with Jefferies.

My first question relates a little bit more to the guidance around net inflows. I would have thought that the number of agreements or new financial intermediaries that you signed up in the fourth quarter of the year, I think it was [ 75% ] from memory was the number. That must be giving you a fair bit of confidence in meeting that $18 billion to $20 billion. But also, I just wanted to know how many advisers that would cover?

The [ $75 million ] is advised. So that's individual.