Netwealth (ASX:NWL) invests in fintech Xeppo, time to buy?

Netwealth Group Ltd (ASX: NWL) has announced that it’s making an investment into fintech provider Xeppo.

Netwealth is a wealth management business that provides a platform that supports how financial products are delivered to the market. Clients and financial advisers can invest and manage an array of different investment products.

Investment in Xeppo

Netwealth told investors today that it’s buying an initial 25% stake of Xeppo and will also be partnering with the fintech. The company has an option to increase its investment to 50% of Xeppo.

What is Xeppo? Netwealth said it specialises in connecting, matching and reconciling data from a wide range of sources to support the wealth management, accounting, SMSF administration and mortgage industries.

Xeppo’s technology “enables users to better manage client relationships, monitor compliance and drive new business and revenue opportunities.”

There are four key areas that Xeppo helps people.

It has tools and reporting to provide licensee and practice management insights. It has customer relationship management (CRM), workflow and marketing capabilities. Technology connects to a broad range of existing specialist systems to obtain, consolidate and manage data. Finally, its applications leverage a single “source of truth” for the benefit of the practice and its clients.

Netwealth also said that it will expand its current integrations to support two-way data feeds between accounting systems such as Xero Limited (ASX: XRO) and MYOB, SMSF software like BGL and Class Ltd (ASX: CL1) and financial planning software including Iress Ltd (ASX: IRE) and Midwinter.

Netwealth said that the investment isn’t initially financially material. However, it was enable and accelerate a number of key initiatives. The company is also hoping the partnership will create a unique and market-leading proposition for multi-disciplinary and integrated wealth practices.

Netwealth joint Managing Director said: “From our recent research, we found that advice firms on average use between 12 and 15 technology systems in their business, all of which have different data models, significant data discrepancies and often overlap from a features perspective. For example, the Netwealth platform captures customer details as does an advice firm’s CRM, planning software, fact find and client portal.

Working closely with Xeppo can solve this challenge and enable systems to better connect and integrate with each other driving business efficiency and great client experiences.”


This seems like a smart move by Netwealth. Improving the client experience and the speed of the process is important for a high value industry like financial advice.

I’m not sure if it’s a buy today, the Netwealth share price has almost doubled this year, so there’s a lot of growth built into the valuation. I prefer other ASX growth shares with lower price/earnings ratios with a similar growth trajectory like Pushpay Holdings Ltd (ASX: PPH).

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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