HUB24 FY26 result - srtong result and the door could be opening again

 HUB FY26 Result commentary

Strong result: 3% higher on my revenue estimate and 8% higher on NPAT. There was a noticeable slowdown in 2H net flows, which raised concerns. Overall revenues up 23%, costs 19% higher and underlying NPAT up 40%. Underlying adds back amortisation. Year-end platform FUM was $139B, a billion less than my estimate, showing the extent of the 2H slowdown, with earnings being better.

The problem with net flows was identified as discretionary investments; super continues to remain resilient. Therefore, likely impact of the Budget or cash tightness, with investors moving to cash before making a decision what to do. If the funds permanently leave the platform, it is an issue for HUB. That remains to be seen, with the base case being investors will reinvest the funds at some stage.

Overall net flows were $18.9B, but skewed to the FH. HUB ended the year with 9.9% market share, up 1.3% over the year. HUB sees itself going to a high-teens market share and has produced evidence, which it has shown many times before. Being HUB is number one for flows; 80% of net flows have gone to HUB and NWL, with 45% going to HUB. 42% of advisors now use a single platform for new account openings, and a further 38% only use two platforms. 37% of advisors use HUB, with 83% of flows coming from advisors already on the platform being with existing licensees, 14% of flows from new advisors with existing licensees, and 3% from new advisors and new licensees. The average advisor has $83m FUM, and the average HUB advisor has $25m on the platform, so more to come across. These statistics show that most growth is embedded with advisors moving existing clients and new money progressively across to the HUB platform. The industry remains in long-term growth, and HUB is taking share.

The Government is expected to announce regulations over the Guardian and Shield debacles. It should be remembered that these operators did not pass HUB DD. New regulations will increase the CODB, but probably make HUB relatively better off. In a similar vein, the trustee is moving from EQT to HUB, and requires financial backing. IMO HUB is moving to bring this under its own control and reduce the chances of a poor outcome. Again, this improves HUB's competitive position.

Hub guided to platform FUA of between $186-200B by FY28; it is $139B now. The growth is driven by market growth and new net flows. If the poor discretionary flows persist, the forecast could come under pressure, although flows should resume is the base case. In the short term, with HUB continuing to spend on new products, margins could be pressured over the next year, and HUB stated that they expect margins to be flat to slightly higher. The issues are industry-wide, not HUB-specific, and should sort themselves out over time.

HUB continues to spend on products across the range but with focus on transition to retirement and HNW. HUB are proving to be the leader in product innovation and setting up a comprehensive ecosystem.

Valuation and summary

The issues in this result look short-term; only if money moves permanently off the platform will there be an issue. That's an industry issue. Superannuation remains strong and is more attractive post the Budget.

Assuming 18% 5Y eps cagr and a 26X exit multiple, generates a 10% return below $70. The base case is that Hub is much larger in several years and flows and the financial markets will both help, and HUB will take share. Every 2 to 3 years there is a market or industry issue that allows an attractive entry price.

 

 

Transcript FY26

Thank you for standing by, and welcome to the HUB24 Limited FY '26 Full Year Results Broadcast. [Operator Instructions]

I would now like to hand the conference over to Mr. Andrew Alcock, Managing Director. Please go ahead.

Andrew Alcock   CEO, MD & Executive Director

Good morning, and welcome, everyone, to the HUB24 Financial Year '26 Results Announcement. We [indiscernible] the traditional custodians land on which we meet today. Our office here in Sydney is on the lands of the Gadigal people of the Eora Nation. We pay our respects to elders past and present and extend that respect to all Aboriginal and Torres Strait Islanders and people with us today. It's a pleasure to be here today talking to you about our results. And with me, of course, is Kitrina Shanahan, our Chief Financial Officer. We'll be covering some highlights of an operating view of our business, talking about our financial results in a bit more detail, covering strategy and outlook and then opening up for some questions.

As always, we remain focused on our customers to support them to achieve their financial goals through our purpose of empowering better financial futures together, which we take very, very seriously in our business. We do that to make sure that we deliver a range of investment in superannuation retirement solutions that support their goals and create great outcomes for customers, creating choice and flexibility- very topical today, very topical this week in the context of superannuation reform potentially coming out from Dr. Mulino tomorrow. But certainly, wanting to make sure there's choice and flexibility that creates great engagement and outcomes for members and investors. Whilst at the same time, increasing that engagement through innovating technology and leveraging that challenge to improve customer experience.

Today, we service or look after about 600,000 customer accounts across the HUB24 business. It's quite a large number, and we take that very seriously. We're very, very focused on building a sustainable business that drives outcomes for customers and shareholders.

Turning to our FY '26 results, highlights and operating review. We had strong profits for the year, uplifts in both revenue and earnings. On the revenue side. Our group revenue is up at just over $0.5 billion, up 23% with a platform at $406.7 million, up 26%; and Tech Solutions, also up 9% at $84 million, translating into underlying EBITDA for the total group result of $21.4 million, which is also up 30% on PCP, platform up 31% at 186.7 and Tech Solutions up $29.3 million at 8%. That's resulting in a stat NPAT of $120 million, or 51%, strong underlying NPAT up 40% and $137.3 million, a fully franked final dividend of $0.42 per share, which is 31% up on last year. And underlying EPS diluted of $1.667 per share. Very, very strong results. Very, very consistent results along with our track record. And in terms of how we finished FY '26 with funds under administration, the total for of $164.3 million, platform at $139.5b as previously reported, it was $144.1b as at the tenth of August last week and our pass-through at $24.8 billion. And I'm sure we'll unpack some of those statistics and figures a bit later on in the presentation.

Putting the FY '26 results into context of our long-term performance trend, you can see on the left-hand side of the slide there that we have a full-year CAGR of 27% group revenue increase and underlying EBITDA full year CAGR of 32%, which demonstrates increasing margins. So long-term consistent growth trends there are both revenue and EBITDA. And with an indicator of revenue the key indicator being for seeing the CAGR of funds and administration also at 26% over a full year period.

In summary, we continue to deliver strong, consistent growth in terms of revenue lead indicators and profitability, and we certainly aim to continue doing that moving forward.

Summarizing our and highlights for FY '26. Certainly, from a leadership and growth perspective, we've been focused on our strategy to lead today with record net inflows of $18.9b if you exclude the large migrations of migrations from last year, our new offers are gaining strong market traction. We'll talk about that a bit later in the presentation. Our largest annual increase in class accounts since '18 and now Infinity growing at twice or more than twice the system growth. At the same time as delivering those leading results, we've been executing our strategy, having commenced development of the evolution of our ecosystem now known as myhub, a wealth tech solution that's integrating leading advice technology with our group capabilities, license capabilities and other capabilities in the market. Engage is also still racing along with our 7,200 advice practice users. We've enhanced our proposition for all life stages of customers, including the launch of innovative retirement solutions. We'll talk about that a bit later in the pack as well. And now -- and class are now Infinity delivering on a multiyear enhancement program. We've also continued to lay foundations for the future. We've aligned our organization to drive execution and strategy with Jason Hair starting with us last week, as our Head of our Chief Innovation and Operating Officer. We brought together key people in our business into an enterprise solutions team focused on building the enterprise solutions that service both our tech solutions and the platform business like Engage, like myhub like HubConnect license and our data products, bringing that together to build that for the future.

We are certainly leveraging -- continue to leverage of innovative technologies with AI helping us with customer value proposition offers. We'll talk a bit about some things that are coming up shortly and also underpinning operating efficiency in the business.

It's been a year to be active, actively advocating on behalf of our customers. and our industry has a positive change with a strong focus on risk and governance system announcements tomorrow in Canberra with Dr. Molino resulting from the Shield and First Guardian piece and all the consultation papers the government of treasury is doing with our industry. We certainly be strongly advocating for that for great retirement settings and good settings for consumers and members and we are making great progress on bringing the HUB24 Superfund trustee in-house, which we hope to have completed by the end of this calendar year.

So a lot of the mix there in terms of what we're doing with our products, our strategy and laying foundations for the future. As a result, though, once again, we have grown our market share ahead of the market. HUB24 as a platform is now ranked #6 up from position 7 last year with 9.9% or just shy of 10% market share. As a participant, we've increased our market share by more than any other participant at 1.3% over the last 12 months. And we've had #1 net inflows for 10 consecutive quarters against our industry. Interestingly, the industry itself is growing with $45 billion of new net flows over the last available data at the 12-month period with our PCP of $36 billion. So we're growing strongly. We're increasing our market share. We're gaining market share faster than our competitors in an industry that is also growing and you overlay that with the trend and the amount of people looking to retire and the success of Australia's superannuation system, it will go as well for a very strong growth prior for the business moving forward.

Looking through that on an adviser lens, there are now 37% of advisers in Australia using HUB24. On the left-hand side of the slide, you can see that increase from 21% in June '22 to 37% in June '26, continued ongoing growth with a full year CAGR of 13%. Our market share having doubled from 5.1% in '22 to 9.9%, almost doubling at 9.9% over the last 4 years as well.

Taking a deeper look at the adviser scenario in the business. Our business has significant growth opportunity from both existing and new advisers. Once again, you can see the mix there of reliable recurring revenue driven from flows from existing licensees and advisor relationships at about 83%, a slight uptick. I think that represents the increasing share of book or share of our customers that advisers are choosing to put on HUB24 but also seeing success in us getting 14% of our new flows new advisers that belong to existing relationships we have in the market and 3% from new license relationships altogether.

A strong lead indicator for our future growth, there were 552 new advisers actively using HUB24 in FY '26, taking us up to 5,649. That all goes well for ongoing flows from existing but also new folks from new advisers. So a great lead indicator moving ahead. And our share of funds under administration per adviser was up to $25 million, up from $14 million in FY '22. We certainly hope to continue that trend of winning share from advisers.

Having said that, having said transition typically takes 6 years for new adviser relationships to move the bulk or the portion of their books, they're moving to HUB24 over. So the industry average FUA per adviser is $83 million. We've got an average of 25, a long run rate there for existing advice, particularly when you consider the accolades and our position in the marketplace and plenty of growth to pick up new adviser relationships as we have done in FY '26 as well. So we are continuing to support existing and new advisers through our strategy and our execution.

Very pleased to be able to once again summarize our recognition from customers and industry researchers with the next slide from the investment trends, competitive analysis and benchmarking report another 1 platform overall for 4 years running, and you can see the other accolades their best product offering decision support tools, reporting and online business management. An Investor Trends adviser technology needs report; number one, NPS, not 1 for actual advocacy and a host of awards are there as well and in the investment trends managed accounts report, #1 for overall satisfaction.

Turning to Advisor ratings, also #1 in terms of NPS and we ranked first in 9 platform categories with Advisor ratings and for Wealth Insights, also now on NPS or platform users with a range of #1s there as well. So a great result for us, and we work very hard at, and we hope to continue to do in the future.

Taking a look at our Tech Solutions businesses, with Class having a stable market share of about 30.5%. And growing, having the highest growth -- largest annual increase in accounts since FY '18. Interestingly, we believe superannuation is more and more attractive moving ahead with the economic policy settings the government announced recently in terms of a great vehicle for people to grow their wealth for their future.

Now Infinity, having a market share of 25.2% on the corporate messenger side, and growing at 2.1x system growth. So great results there from Class and now Infinity, but also both recognized as industry-leading solutions with Class rank #1 in innovation and brand awareness, in the investment trends 2026 SMSF report. And now Infinity also ranked #1 for the most used legal document provider and #2 for brand awareness. So examples of all of our business leading today with that strategic pillar. And we're very proud to be able to talk to you about that.

We'd like to acknowledge our amazing and focused team. And I said that very clearly, our team is very focused on customer outcomes. And you see that in the awards and the recognition from our customers. We believe in our purpose and we act accordingly. Certainly, we are investing in our people in terms of leadership and talent, and we're investing in career growth across all levels of the business and empowering female leaders for long-term success. We also have award-winning graduate early careers programs that strengthen our future talent pipeline. We're a very values-led culture and organization, driving strong performance with 80% employment engagement ranking HUB24 in the top quartile of employee engagement have a diverse workforce and flexible collaborative inclusive workplace that aims to attract and retain talent. And of course, we're building a future-ready workforce, strengthening our executive team with recent appointments using AI and technology to drive productivity and growth and innovating for the future with our innovation in Cedar Innovation Lab, building talent and capability.

If you turn to our ESG focus, our focus is clearly on building a robust and sustainable business as seen through our results and echoing our sustainability priorities. On the right-hand side there, you can see our focus areas, and there's more details in our published reports about our ESG area. On the left side, some progress, clearly delivering for our customers market-leading NPS, high employee engagement. We've made significant progress towards our 2030 Net Zero goal for Scope 1 and 2 emissions, and we've adopted the AASB 2 related disclosures, maintaining a whole lot of gender diversity targets across the business and continued commitment to United Nations Global Compact. The role we play, it's very important for our community, and we're very focused on that. We are committed in HUB24 to robust governance and advocating for a stronger retirement system. Superannuation in our country is 34 years old, trust is very, very important to play the role we play to help Australians take choice and ownership and engagement for their future. And there's an expectation of strong governance. We're certainly committed to that. We have a continued focus on robust governance and consumer protection. We've been actively collaborating with the final Services Council, in fact, to build standards that the industry can adopt. We're working to move the upon trustee inside the business and certainly working with the trustee ensure that governance practices aligned with customer regulator expectations moving ahead. We've been championing for choice actively capping for choice for people to take control of their money and their superannuation their retirement savings to have the flexibility and the right choice they need and advocating for greater access to quality financial advice and playing our role very seriously in the Australian focal services community. We don't want people left behind. We don't have to be looking behind. We're going to be looking forward and ahead and shaping great outcomes for our industry and better outcomes for Australians.

I'd now like to hand over to Kitrina Shanahan to give you an update on our financial results.

Kitrina Shanahan   CFO & Joint Company Secretary

Thank you, Andrew. So moving to the financial slide. We have the group snapshot with the group revenue of just over $500 million at $501.1 million and underlying EBITDA of $211.4 million. Platform segment contributes the majority with $406.9 million revenue and $186.7 million underlying EBITDA and 5,649 advisers actively using the platform on the 30th of June.

Tech Solutions, which comprises the Class business now Infinity and HubConnect businesses delivered $84 million of revenue and $29.3 million of underlying EBITDA across over 6,800 financial professionals.

Okay, moving to the next slide. We have the group results, reflecting strong operating leverage with revenue growing 23% to $501.1 million and operating expenses growing 19% to $289.7 million. The strong positive jaws delivering 30% growth in underlying EBITDA to $211.4 million and underlying EBITDA margin expansion of 2.3% to 42.2% for the group for the year. EBITDA, including share-based payments, grew 33% to $198 million underlying net profit after tax, up 40% to $137.3 million and statutory net profit after tax up 51% to $120.2 million.

Okay. So turning to the Platform segment. Platform custody for grew 24% to $139.5 billion with total for, including the past noncustody, up 20% to $164.3 billion. Platform net inflows were $18.9 billion full year 26 million with no large migrations during the year. On a headline basis, that's 4% down on last year. However, when you exclude the $4 billion of large migrations in full year Underlying net flows are up 20% year-on-year. Positive markets also contributed $7.9 billion during the year for the custody fee. In the Platform total segment, the revenue grew 26% to $406.9 million. Expenses were up 31% to $196.7 million, lifting the underlying EBITDA to 31% to $186.7 million and expanding margins growing to 45.9%, up 1.7% on full year '25.

Okay. So continuing on with the Platform segment. This slide shows the tight relationship between the full and the revenue growth. Platform revenue is up 26% to closer to $407 million which is tracking for growth closely over the 5-year period, which you can see in the graph on the right-hand side. The bottom graph on the right-hand side, the custody revenue margin declined 1 bp over the year, driven by a reduction in admin fees from fee tears and capsid account balances grow. In the second half, there was a reversal of the benefit from the first half, driven by seasonally higher cash balances.

All underlying EBITDA grew 31% to $186.9 million, a 4-year CAGR of 32%. Growth came from higher FE and associated revenue partly offset by continued investment in people and resources to support growth in our strategic objectives. Margin expanded 1.7% to 45.9%, demonstrating the scale benefits in the model while we continue to invest in the strategy and future opportunities that we can see.

Okay. So moving to Tech Solutions. Tech Solutions delivered underlying EBITDA growth of 8% to $29.3 million with revenue up 9% to $84 million which included price increases and volume growth. And as Andrew said, the class accounts had the best year in the last 4 to 5 years. Cost counts are up 5% to just under $227,000. Operating expenses are up 10% year-on-year, with a full year inclusion of share registry fee costs and we also started a multiyear program of enhancements to the NowInfinity software. That left underlying EBITDA margin slightly lower at 34.9%.

Okay. Moving to group expenses and margins. Total expenses, excluding acquisition amortization increased 18% with the biggest drivers being employment-related costs with employee numbers up 14%. We had just over 1,000 employees with 1,096 employees at the 30th of June and administration costs are also up year-on-year. You can see that in the graph on the right-hand side, up $14 million year-on-year. And this represents the growth in our suppliers, which also includes external technology suppliers.

Okay. Moving to profitability. Profitability grew strongly with underlying NPAT up 40% and statutory NPAT up 51% to $120 million. The effective tax rate for the year was 17%, which is down from 20% in full year '25. This reflects the timing impact of purchases and utilization of treasury shares for the service of the employee airplane and also includes R&D benefits for the group.

Okay, moving along, we have the balance sheet and cash position, which both remain very strong. Operating cash flows for the year were $197.5 million, with a 93% correlation to underlying EBITDA and a 4-year CAGR of 34% for group operating cash flows. Some of the use of cash in the year, as I mentioned on the previous slide, $56 million of treasury share purchases to service the employee share scheme. There was $75 million drawdown in the year for the super fund operational risk financial requirement, the also capital for the super fund. That's a total loan of $78 million at the 30th of June, and we've also included in this slide a quick note at the bottom that when we in-source the trustee, which is expected, as Andrew mentioned later this calendar year, it's nominal consideration and we're not expecting material movements to the underlying EBITDA for the group for that transition.

Okay. On the last financial slide, we have the fully franked dividends. So we have the $0.42 per share dividend, up 31% year-on-year. That takes the total dividends for full year '26 to $0.78, up 39% year-on-year. And we have distributed full year CAGR of 41% and a total shareholder return 4-year CAGR of 39% for the year.

With that, I'll hand back to Andrew for the strategy and the outlook.

Andrew Alcock   CEO, MD & Executive Director

Thanks, Kitrina. Our strategy remains consistent to build on our success today. captured on this slide here, we certainly tend to deliver shareholder value through leading today. That's the left-hand side of the slide with a strong growth outlook in our existing established businesses the HUB24 platform well positioned to increase its market share from the current 10% and to continue to benefit from industry transformation and Class and NowInfinity accelerating growth supported by structurally growing markets with an ongoing investment in those businesses as well.

But taking the opportunity to create additional customer and shareholder value as our industry continues to transform. And there's some trends and environment that's certainly much place to this, which we'll talk about on the next slide with increasing demand and the need for technology sold into problems.

So creating additional shareholder value through our technology strategy, talking about myhub, which is bringing our ecosystem together and HUB24 investing in solutions that continue to lead and continue to transform the industry, leveraging our cake and be lease as a group to build outcomes that provide greater outcomes of facial advisers and their clients, enhancing the client experience, leveraging our unique data capability, which we'll talk about in a few slides as well to provide secure and integrated access to high-quality data to get better outcomes for advisers and their customers and strengthening our advocacy and leveraging the group footprint to deliver more products for all customers through the building of that technology supporting growth of the platform, Class and NowInfinity and our Tech Solutions and our technology businesses together, transforming and working together to create today it's a lead today and also create future value for tomorrow. We believe we are uniquely positioned to capitalize on structurally growing markets and industry transformation. There is a strong set of tailwinds in our industry and strong growth, we expect to be driven by those tailwinds. Superannuation system is growing. And that will be reinforced, we really, by the proposed tax changes, which are making superannuation an attractive vehicle for growing wealth, competent property and other parts of other asset classes. There is a demand for retirement solutions as superannuation retirees are retiring with more in [indiscernible] than they thought and more and more each year. It's now 34 years old. So every year, there are additional Australians retiring with additional funds than previously thought and this demand for advice and solutions to support that growth so that people can take control of their retirement outcomes into generation of wealth transfer and the demand for advice continuing to increase.

The strong tailwinds for our industry for growth, the industry dynamics themselves are also favourable. There's an ongoing shift towards leading providers are offering a better client experience and outcomes. We see ourselves as 1 of those leading providers. There's the emergence of large-scale advice networks leveraging technology and scale. The complexity issue is still there in our industry, and we seek to solve that in terms of solving compliance issues and data issues to drive productivity for advice firms and emerging technologies and new global capabilities such as AI are creating opportunities to enhance efficiency.

There is a demand for safe viable and trusted solutions, and we certainly are investing in our industry to do that and continue to be an industry leader. And the significant market share opportunity for the platform consolidation of 80% of industry net flows captured by 2 platforms over the last year with HUB24 capturing 45% of those and 42% of advisers are now using a single platform for new account openings over the last 12 months with a further 38% using 2 platforms. That's really interesting when you think about the utility and the range of products and services that we offer through our platform, which we'll also cover in the next couple of slides as well, it means we can cover more client use cases and for more advisers.

Looking at how we focus on this strategy on 1 page. On the left-hand side, our 4 strategic pillars are there, lead today, create tomorrow. Built together, we certainly see ourselves as an industry participant that is open architecture, working across the industry to being the best operate solutions together for our clients and also thinking about our future and making sure we are ready for what's yet to come. We do that to be the best provider of integrated platform technology and data solutions. That's certainly our vision. And the graphic there looks at our capabilities across our business and how we can tend to integrate those and wrap them around with myhub. All aims to enhance productivity for financial professionals and deliver solutions that meet the needs of customers across their life cycle.

Looking at that life cycle on the next stage, HUB24 is solving customer needs across multiple segments and life status. Whether your starting out or in wealth drawdown and preservation or you're undergoing into generational wealth transfer, we have a range of solutions across our businesses to cater for those different life stages and certainly indicated for them with different client demographics. The mass market, mass affluent and private world, high net wealth clients as well with a range of solutions from our simple Discover superannuation offer through to private invest which is a wholesale-only investor solution as well, which has non-custody assets as well as the HUB24 platform with it.

So a range of solutions, as I said earlier, advisers are more and more choosing to use 1 platform for new business. It's partly because the scope of our platform does cater for those different life stages and those different client demographics as well in 1 easy to navigate ecosystem where you can move across different products over time. As an example of that, we have continued in FY '26 to expand our superannuation offer to meet customer needs, empowering our advisers with greater confidence in retirement. We enhance that by adding lifetime superannuation solution. It's an innovative irons in partnership with TAL providing income for life, managing longevity risk and getting concessional treatment percentile asset tests and pension payment flexibility to also enhance when we did in the retirement space in this year.

Demand for Super Retirement Solutions is growing with $4.4 trillion of super assets expected to grow to 11.2% by 2043 and 3.6 million Australians transition to retirement over the next 20 years. 68% of Australian say they're worried about outliving their retirement savings, which is why 1 of the solutions we added, the RS plays to that particular need, providing guaranteed income for life. And we're continuing to innovate and provide efficiency and enhance the client experience. Some of the other features we have during the year was a multistep transitions enhancement, a digital capability allowing advisers seamlessly execute complex advice strategies at the same time, avoiding the need to be out of the market, allowing customers to move from accumulation to pension or recontribution to pension with greater efficiency and accuracy and not having the risk of being out of the market while they implement those strategies, which, in some cases, for our competitors, take 3 to 4 weeks.

Another example this year is our leading high net worth offer, expanding our reach of our platform across segments and delivering growth. We are recognized as the #1 platform overall behind it world focused advisers with flexible tailored offerings across those channels. We have a large growing footprint. We launched Private invest. It's an innovative solution for wholesale clients. It's now contributing greater than $1 billion of FUA in less than 12 months operation. It has integrated noncustodial assets as well as assets in custom HUB24 platform in a reporting service.

There's a significant opportunity for high net worth solutions with $4 trillion of high-net-worth assets across 760,000 investors and 35% of advisers primarily focused on that.

Not to take away from our previous slide, which talked about superannuation, which drives resilient ongoing flows into our business as well with a very, very strong footprint in superannuation for accumulation and a strong footprint in high net walls as well.

Turning to myhub. In addition, myhub on the page here, gives a graphic for how my Hub is bringing together the HUB24 ecosystem of Class, HubConnect platform and the businesses that we own. There's a couple of businesses in there, invest stream and advice design, if you have minority investments with. Bringing that together that ecosystem together to work with practice technology on the left-hand side, the tools that advice practices have and integrate that seamlessly in a modular and open architecture ecosystem designed to get better outcomes to clients, designed to get better outcomes for advisers allow advisers to see more customers and see them more efficiently. Certainly, our strategy to continue to transform and change the shape of our platforms work with advice in the Australian industry. There will be a progressive rollout of myhub from 1H '27. There's integrated AI prompts around the platform will be coming out shortly. We have an AI-enabled advice review tool that we're in conversation with large licensees. They can use our advanced review tool to put their advice documents pre and post publishing through to look for compliance issues and speed up that process of getting advice to market. That's a commercial offering that we're taking to market as part of myhub, the Engage reporting also part of my hurters expanding to include customer data being fed through from Class where Class has hundreds of data feeds from across different financial services providers. in the industry. And we're collaborating with our customers and partners to streamline the advice process across the board with small practices through to large national groups as well by bringing the best that we have and the best the market has in an ecosystem that's open tables.

So moving ahead, there's a significant opportunity for growth and value creation for both our customers and our shareholders. We're very excited at the position we have in the market and certainly focused on delivering more as we move ahead. We have structurally growing markets, and the demand for integrated solutions is increasing. We see our role of closing that gap and allowing more people to get advice and growing our market in the addressable markets, strong and reliable growth to HUB24 from existing and new customers as we covered our continued focus on governance and risk culture and great customer outcomes, leveraging our unique footprint to unlock value and leverage our technology leadership with a scalable operation enabling both EBITDA growth and margin expansion as well as ongoing investment at the same time.

Our balance sheet is strong we're comfortable we have robust cash flows, and we are generating great shareholder returns. We've updated our fluid target for FY '28. So at the end of FY '28, we expect to be in the range of $186 billion to $200 billion of funds under administration. That target comprises ongoing growth and Kitrina, I'm sure we'll unpack that for us a bit later and a range of market growth assumptions. That's up from a target of $160 billion, $170 billion at the end of FY '27. So looking forward a year later than that, it's $16 billion up at the bottom of the range and $200 billion at the top of the range there.

I'd now like to open up for any questions and hand it over to you sort on the line.

Operator  

[Operator Instructions] Your first question comes from Tharan Jeyathasan with JPMorgan.

Tharan Jeyathasan   JPMorgan Chase & Co

So just a first question on net flows, please. So importantly, net flows in the second half slowed down quite materially on the first half. And Compositionally, there seems to have been a step-up in gross outflows as well. So just if you can help us understand this a little bit. Are you attributing most of that slowdown to the post-budget environment? Or is there something else we should be aware of? And if it is post budget related, then do you expect this to normalize? When do you expect this to normalize, should we be thinking that there's a sharp redeployment of funds that's just sitting on the sidelines as 1 of your peers is implied? And just how you're thinking about the FY '27 in context of all of this, please?

Andrew Alcock   CEO, MD & Executive Director

It's a logical conclusion that it's had some with the budget and the prevailing economic conditions, you unpack that our superannuation flows are very resilient. In fact, we saw them pick up in the last quarter. And so it's a story of 2 different parts of our book of business. The superannuation business is growing. In fact, our gross flows for the first part of FY '27 are up on last year. But there is an uptick in outflows in discretionary funds under administration, IDPS book. which you see that happens cyclically in certain economic conditions. And so it logically suggests that the budget settings are driving people thinking differently about how they invest in the future. And I think that's just a time basis, if you look at the fundamental lead indicators in our business with the demographic trends, the number of advisers using the platform, I think it just is timing, and we'll see that settle down as people get their settings certain for the future, and we're still waiting for some certainty about some of the legislation around the budget. So I see that as just part of what's going on at a macro level, not an indicator of our business. All the lead indicators for our business is strong and robust. In fact, stronger than they were 12 months ago, if you look at them indicatively in terms of gross flows and advisers is an economic cycle and we go through those periods from time to time.

Tharan Jeyathasan   JPMorgan Chase & Co

Okay. And perhaps just a follow-on question just around the competitive environment now that your peer has launched its individual capability for private wealth and stockbroking clients. I assume Private Invest is your equivalent solution. First, is that correct? And I think you called roughly $1 billion of FUA were there. How are you thinking about the growth trajectory for that product? And what are the economics like for you?

Andrew Alcock   CEO, MD & Executive Director

Our Private Invest is a solution for that part of the market, we have far more FUM in other high net wealth products as well. So we've got exposure to high net-worth clients in our core -- sorry, in our choice platform, and in noncustodial services, private investors is a little bit different in an MIS scheme that has different treatment for the wholesale investor test. So it's not representative of our only foray into that market. It makes it easier with different settings to use that product. It's been in the market for a short period of time. But we've -- for a long period of time being in the high net wealth space for a long period of time been dealing with broker clients with Evans & Partners and all the net being key market clients in that space. And so we're very, very comfortable with our value proposition there. We've got a dedicated team. As for net wealth solution, happy for them to talk about that. But from our perspective, we've been in this part of the market for a long period of time. And we're ranked #1 according to investment trends in that capability set.

Tharan Jeyathasan   JPMorgan Chase & Co

Okay. And if I could sneak in just a third question around HDFS. I know that you'll complete the acquisition in the first half of '27, and you flagged that it should be EBITDA neutral. But from what I understand, after having posed some license conditions and part of that is an independent expert to be appointed to review everything. So just if you can provide us with some color around this process. what the milestones are and any risks that you think are worth highlighting or costs associated to that process?

Andrew Alcock   CEO, MD & Executive Director

Sure. There will be some costs in our run rate for the project to bring HTFS inside. Those license conditions are imposed on HDFS, which we don't own. It's owned by EQT and their obligations at EQT is working on it. We're working with them. And so we do expect the move in-house to be neutral to us from a cost perspective. We're maintaining that view. In terms of some of the milestones, we're very, very comfortable with our investment governance processes. You'll be aware that we didn't have exposure to Shield in First Guardian the license conditions on the licensee are similar to those on the sister company than ETT have similar to 4 other platforms in the marketplace as well. So whilst there's an independent expert reviewing our menu, we don't expect that to cause any issues for our business any material issues at all. That process is underway. I expect that to be completed in the next few months and there'll be an ongoing look. So I think you won't see any operational or economic impacts of the trustee transition to HUB24. That's our strong belief. We're certainly focused on bringing it in-house and certainly excited about having the trustee board have the proximity to us as a business rather than the close board looking after 12 different funds to have a benefit for them and for shareholders as well. So no impact there. There is a process, the investment is being reviewed. It's not stopping us from running our business is not stopping us from adding new investment options to the platform. It's just part of the industry having to lift the bar, and we very much welcome that bar being lifted on behalf of end consumers.

Operator  

Your next question comes from Elizabeth Miliatis with Macquarie.

Elizabeth Miliatis   Macquarie Research

The first 1 is just on the EBITDA margin for the platform business and then the group overall. What's the outlook over the next couple of years. I think consensus as 2% of margin expansion over the next few years for the platform business. So a bit of color on that would be great.

Kitrina Shanahan   CFO & Joint Company Secretary

Yes, I'm happy to take that one. You can see in the historical performance of the platform business that we have continued to deliver underlying EBITDA margin. The intention we can clearly see operating leverage in that business and we know that we can deliver operating leverage in that business going forward. The balance that we've talked about in the past and that we continue to do is the investment level. We can see opportunities for growth and to expand our reach and to expand our target market. So we are continuing to invest, and Andrew talked about some of the strategies that we've got out there, including my hub, we're doing lots of things. We've got the offer out there for the Iress retirement solutions. So we do continue to invest in new solutions plus the myhub strategy. When it comes to the group margins and you look more at '27. As Andrew sort of mentioned, when we're looking at the FI and the net flows, the outflows on the IDPS side have been elevated compared to last year, and so that may have an impact on the revenue growth for the year, but we are still going to continue to invest. So you may see flat to slightly growing underlying EBITDA margins. So I'll certainly come back on the growth that you've seen in '26 is my expectation.

Elizabeth Miliatis   Macquarie Research

Okay. And just start to slightly growing is at the group level just comparing that?

Kitrina Shanahan   CFO & Joint Company Secretary

But just confirming -- you could say that 1 again? I think you said that you were expecting flat to slightly growing. Is that what you said?

Elizabeth Miliatis   Macquarie Research

Just clarifying, you just your final comment there about flat to growing EBITDA margins. Is that at the group level or at the platform level? Just a double, double check.

Kitrina Shanahan   CFO & Joint Company Secretary

That would be at both the group and the platform level.

Elizabeth Miliatis   Macquarie Research

Okay. And then just a second question for me today is just the fee margin. Obviously, there's a bit of up and down on the trading and cash fee income that we've seen flow through but is this 31% range? Should we assume this is sort of the sort of steady state or perhaps the exit rate as we see it and sort of rebase our numbers from here?

Kitrina Shanahan   CFO & Joint Company Secretary

So yes, the 31 bps for the custody revenue margin, we always say that you can expect to see anywhere around 0.5 bp to 1 bp of margin compression as you see people's average balances grow and they move into higher tiers or they hit a cap. That trend, you can expect to see that. So when you roll forward to '27, I still expect there to be anywhere around 0.5 bp to a bit of margin compression on the custody revenue margin.

Operator  

Your next question comes from Nick McGarrigle with Barrenjoey.

Nicholas McGarrigle   Barrenjoey Markets Pty Limited

Just 1 on the first in a bit weeks of the year. Can you give us the split between market and flows for that $4.6 billion of growth?

Andrew Alcock   CEO, MD & Executive Director

Sure. Do you want to take that Kitrina?

Kitrina Shanahan   CFO & Joint Company Secretary

Yes, I'm Happy to take that one. So Roughly, it would be about $2 billion would relate to net flows for those 6 weeks up to the 30th of August. And therefore, you've got roughly about $2.5 billion, $2.6 billion of markets in there. So I think everybody knows that the ASX 200 has been sort of circa around that 4%. So we're probably were lower correlated than that, obviously, we've got a much lower impact on the markets and so the aspect's 200.

Andrew Alcock   CEO, MD & Executive Director

The gross flows so far are consistent or higher than last year. I think what you're seeing is, as we said earlier, there's uncertainty in discretionary funds and money moving around in IDPS which happens at times like stat tends to come back at subsequent times.

Nicholas McGarrigle   Barrenjoey Markets Pty Limited

That just as my follow-up question. If there are higher growth outflows, where do you think that they're going? Are they kind of parking being parked outside the platform until the tax environment is more certain and people want to have a more clear vision of how they want to deploy that in terms of product? Or is it tax structure as well?

Andrew Alcock   CEO, MD & Executive Director

I think it's a logical assumption, Nick, we can't tell because it's not going through a superannuation gateway. You certainly had flows in outflows at the end of quarter 4, which in some cases, was people restructuring for tax or paying tax bills. We certainly saw some large withdrawals people who had significant tax bills from really older high net wealth customers coming up to in May and June. Your question is a logical. Your question is really the answer. I think there's some uncertainty out there about the future of different structures for different types of people who have those sorts of investment products. They're typically high net wealth people. And I think it is people getting reset at this point in time and either chasing cash flows or thinking about markets and timing, but it's really in the discretionary space, not in the superannuation space.

Operator  

Your next question comes from Jeff Cai with Citi.

Unknown Analyst  

Just the first 1 in terms of net flows. To what extent are you seeing signs of IDPS flows have started to recover in August? And is it possible that flows remain quite depressed until second half '27?

Andrew Alcock   CEO, MD & Executive Director

Do we have that analysis?

Kitrina Shanahan   CFO & Joint Company Secretary

We haven't seen a significant change in the trend for going into the 13th of August on the IDPS flows. So for the whole of -- so through that first 6 weeks, we've sort of seen that elevated outflows on the IDPS side. As Andrew said, we have seen resilience on the super side. And so the super side of the business continues to grow. We're seeing a set the growth flows continue to come in. But on the IDPS it's been fairly consistent coming out of June. It's been fairly consistent.

Unknown Analyst  

Okay. Got it. And then a follow-up on the EBITDA margin guidance. So to get to that flat or slightly higher EBITDA margins. Are we -- are you sort of suggesting that core cost is going to be circa 10% year-on-year for FY '27?

Kitrina Shanahan   CFO & Joint Company Secretary

It's going to be -- it will be above the -- when you look at total expenses, it will be above that 10% or be sort of in that low to mid-teens range.

Unknown Analyst  

Okay. And does that low to the mid-teens include the in-sourcing of the trustee business?

Kitrina Shanahan   CFO & Joint Company Secretary

It includes the -- any project and transition expenses. And as Andrew said, we do have a program of work around the transition, and we are working with the existing trustee on uplift and license condition programs. It includes all of those costs. When we do take -- when the change of control takes effect and we take ownership of the trustee, then both the revenues and expenses will go up for that. that's not included, but that will have a net neutral underlying EBITDA impact. And as we get closer to that, we'll give you a pro forma so that you know how to model that.

Operator  

Your next question comes from Simon Fitzgerald with Jefferies.

Simon Fitzgerald   Jefferies

Andrew, I was hoping to explore a bit more about the industry average for per adviser. Obviously, it's very high at that sort of $83 million level. Part of that, I imagine, is that some books have been cut or at least some of the legacy books where they've lost a lot of financial advisers, but maybe some of those assets are orphaned. And I guess, obviously, hubs average for per adviser has increased nicely. But I wonder if there's an effect in all of that as well that maybe not a lot of that or not all of that $83 million is actively managed. And I guess I'm asking you that in the sense that is at a reasonable goal to be striving for that? Or could you at least keep those sort of numbers eventually over time?

Andrew Alcock   CEO, MD & Executive Director

Look, it's a broad statistic based on the industry who are divided by the adviser. So you're correct, there will be some orphans or unadvised clients in that. But you'll also have some advisers with over $100 million and so it's just specific to show that there's a growth rate, if you look at the averages. It's a proxy for us to say, we have had. Statistically a low level of penetration when you think about that moving forward advisers will have 1 or 2 platforms. And our share is far lower than the industry average. It's just fair to illustrate that. When you unpack it, you're right, there'll be some unadvised clients There'll be advices with more than $100 million. We've got advices of more than $100 million in our platform. It's just to demonstrate that there's way with our existing client relationships that we hope to increase the share of wallet, and we're seeing that number tick up. And basically, this is, hey, we're doing a good job at actually growing the share of wallet at the same time as getting new advisers. It's simply for those illustration purposes.

Simon Fitzgerald   Jefferies

Yes, good. And then just 1 really quick question on the tech solutions. Class delivered its largest annual increase, I think, in terms -- and NowInfinity grew quite nicely as well. There's been some of those sort of metrics that we look at in terms of document handling and things like that. But I don't think the revenue grew anywhere near as much. So I'm just wondering what the sort of core drivers we should be thinking about the sort of Tech Solutions business in terms of revenue going forward?

Andrew Alcock   CEO, MD & Executive Director

I think you might [indiscernible] the EBITDA or the revenue.

Kitrina Shanahan   CFO & Joint Company Secretary

It's clearly when you look at the past document all of 15% growth companies, 11% growth. Class account, which is a 5% growth is the largest part of that part of the business. The revenue growth because of CPI price increases and because of volume increases, the SMS, the market for the 12 months to March grew slightly over 4%, and the Class number of accounts was slightly above the market or slightly above where -- so if the market was growing just above the 4% class was slightly above that. So it's really around the SMSF volume drivers and then think of it as CPI revenue increases are the biggest factors that are going to hit the revenue in the Tech Solutions business.

Andrew Alcock   CEO, MD & Executive Director

So the revenue is up 9%, but the EBITDA is and that's partly because of the cost of some of the investments in the registry fees, yes.

Kitrina Shanahan   CFO & Joint Company Secretary

Yes.

Operator  

Your next question comes from Blake Dowsett with Jarden Group.

Blake Dowsett   Jarden Limited

Just very quickly come back to the a number that you provided in the first 6 weeks, just in terms of what you've seen in the past in these situations, where there's a bit of outflow in IDPS, does that tend to -- in your experience, does that tend to be through a loss? Or is that through that you think of as deferred it comes back on to platform at a later state I'm just trying to get a feel for how the cadence of this could look going forward?

Andrew Alcock   CEO, MD & Executive Director

We've seen catch-up periods. We've seen periods where we've raised a hit and our flows have surprised the market. You see that after cover, you see it at other macro events. If you like me, you're thinking about where do you invest, you invest in growth stocks or income stocks of the tax settings? Do you reset your portfolio? And so generally, it comes in cycles. We see fits and spurts. So we see a slowdown. We certainly see the level of outflows tail off. We've seen that in the past as economic conditions have stabilized, and we've seen catch-up periods as well. So that's the best answer I can give you.

Blake Dowsett   Jarden Limited

A little bit of everything.

Andrew Alcock   CEO, MD & Executive Director

Yes. [indiscernible] time here for the next 12 to 24 months as the budget settings roll through.

Blake Dowsett   Jarden Limited

Looking at your FY '28 FUA guidance, I guess, is probably the biggest confidence point from all of that, that would indicate that you think this is relatively transitory. Maybe if you can talk through some of the buildups that go into the bottom end, just as the top end of that guidance and whether you are forecasting any of this difficult period to play into that sort of number?

Andrew Alcock   CEO, MD & Executive Director

So before we do, but the comment I've got is that superannuation will become more attractive, and we see that come through. If you look at the policy settings in the superannuation has the best concessional tax treatment, I would expect that over time, more people will top up their super more than before, and that's been a very large part of our business. And so my compensate or offset any other downturn you have on the other side. If it's unchartered, but certainly, superannuation is a growing all of money. It's a growing market, and I expect that to actually benefit from budget settings. And you must see that come through differently. But did you want to unpack the flow.

Kitrina Shanahan   CFO & Joint Company Secretary

Yes. So I think in the guidance that we've given out to 2028, there is obviously a varied range of net flows plus markets that you can get to, to still stay within the range. And so just from a base case perspective, you could be anywhere around that sort of $18 billion, $19 billion plus 5% to 6% market, and you're still sort of landing somewhere around that middle east of the range. And so -- but then if the -- it's unlikely based on history that we've seen, it's unlikely that when you get this slower period because of macro environment, unlikely that it continues for 2 years onwards. So you would expect last time you get to 2028 for this macro environment that we're sort of just settled down a bit.

Blake Dowsett   Jarden Limited

Is the flex between the bottom end and the top end, is that coming through your assumptions on flow? Or is it more your assumptions on the market returns?

Kitrina Shanahan   CFO & Joint Company Secretary

The combination of both.

Operator  

Your next question comes from Andrei Stadnik with RBC.

Andrei Stadnik   Morgan Stanley

Can I ask my first question just around your positioning across the different customer segments. You currently all the way from mass affluent, optimal to net worth potentially ultra high net worth. Are you happy with the positioning in new products? Or are there any areas you'd like to see more or be integrated?

Andrew Alcock   CEO, MD & Executive Director

I'm going to be very happy with our positioning. If you look at the research from investment trends, actually have us as leading in each of those segments as a platform offer. So we're very happy with the positioning. We see all parts of our business growing. And we think that's part of our strategy is to think through the lens of the customer or the adviser as opposed to a particular marketable product is to have multiple solutions with different legal structures, super non-super MDA MAS schemes to cater for those. So we're very happy with the positioning. We continue to work in all of those, and we're active in all of them. So I think, in general, the problem to solve for Australia and the challenge that we're into certainly investing in is making advice more efficient regardless of which segment you're in. And so making delivery and implementation of advice on the platform and the steps before it as efficient as possible, plays to all those segments. That's our focus as opposed to positioning a product differently in a segment. It's how do we get more throughput? How do we make it easier for customers to get the help they need and help advise to that. That's the lens through which we look at the business. So we've got advisers operating in all those segments and across those segments. And so our focus is on that efficiency piece for them and the choice and flexibility.

Andrei Stadnik   Morgan Stanley

And for my second question, can I ask around platform revenue margins, particularly around the trading side. Is there anything you can do in terms of product features to encourage more trade and more activity among clients?

Andrew Alcock   CEO, MD & Executive Director

Look, I don't think we're thinking about we get more trading revenue in terms of encouraging people to trade. We're encouraging people to save long term and have good advice. So that depends on the advice and what's going on in the markets. We're not necessarily a trading platform. We're a long-term investing platform. And so we certainly see those things happen. So you see more cash statistically in the first half as dividends come in an income coming and you see more trading that gets settlement to the market, you see it over a 12-month period. Certainly, we think about different products different revenue opportunities for the business, but not actually actively encouraging trading as such. That's driven by markets and driven by client needs, and we think that should be done robustly and safely.

Operator  

Your next question comes from Olivier Coulon with E&P.

Olivier Coulon   E&P

Just on the Molino commentary tomorrow, what sort of industry import has been into that from the platform side of the industry to try to counter some of the I guess, rhetoric from the superannuation funds that are trying to protect their back books or 1 of the work?

Andrew Alcock   CEO, MD & Executive Director

Look, there's been a huge amount of effort and conversations occurring from all parts of the industry. You're seeing some being more vocal in the media. But certainly, there's been a lot of work done through the Focal Services Council collectively on behalf of platforms and investment managers and advice businesses as there has been from individual businesses like ourselves. So there's been a lot going on. We've had private meetings with the minister. We have collective meetings with treasury and regulators, spend a lot of activity there. I think that we'll wait and see what comes out tomorrow, but there does need to be real clear advocacy for choice and engagement in our industry [indiscernible] our citizens money. And you've got some actions. I don't need to comment on the politics because some actions where you've seen lots and lots of people moving towards platforms and advice because they need help. So our goal is to provide that help, and the government very much recognized as that helps required. I think you'll see some sensible outcomes tomorrow, but can't preempt that, but there's been a lot of work on end.

Operator  

Your next question comes from Jack Lynch with Taylor Collison.

Unknown Analyst  

First 1 is just on the super component of the flows. Clearly, it's been strong over the last 12 months. It sounds like in this trading update as well on the funding pools, they've accelerated us quarters. I'm just trying to get a sense of your guidance there. Have you assumed IDPS flows are just cyclical and they recover? Or do you assume an acceleration in super flows coming out of some of the stronger performance that you've seen over the last 12 months?

Kitrina Shanahan   CFO & Joint Company Secretary

I think with the range that we've got for those net flows, any of those outcomes would fit within that range. We generally -- when we look at forecasting out for the FUA guidance, we take the market conditions that we can see and the momentum and the pipeline within the business that we can see. And then we assume normal market, but we haven't -- even if you take the first 6 weeks of August and also you could see it when you were coming out of Q4, the last quarter of full year '26 and then the first 6 weeks, we've kind of seen that uplift in outflows on the IDP side. Even with that rate continuing, you would still get within the range that we put in there. But then again, if there was a shift in an acceleration in superannuation, you -- that may well get you to the top end if that continued with everything else. So the range would cater for every scenario.

Andrew Alcock   CEO, MD & Executive Director

In terms of our approach, we look at a model and we think about where we'll see some, we try and build a range around it with multiple sensitivities. We don't want to be changing guidance. Last August, we had a $14 billion range as well and the February following that. We shrunk that down to a $10 billion range, and we added $10 billion to it. And so it's not as if we think about individual factors. We think about where we think we're heading. And then we go, okay, what's the margin on top of that? What's the margin below that, whether it be market sensitivities or flow sensitivities, it's a model, and we don't want to be updating guidance. So our approach is not sophisticated to think about what will we get for IDPS and Super, we think about a range of activities and try and give some guidance where we've got a range on the site.

Unknown Analyst  

Yes. And you mentioned tomorrow some potential outcomes in what's going on in Canberra. Just trying to get your sense around what gives you confidence in a more competitive neutral outcome in terms of switching bottoming of costs? And then on the cost side as well, just keen to see how our positioned hub is if there is an increase in what codified due diligence and high compliance costs coming through the platforms?

Andrew Alcock   CEO, MD & Executive Director

I think if you look at the demand and you look at the DBFO reforms and the fact that you've got industry funds saying they want to be able to deliver advice and advice is not available as open it needs to be any sand in the gears or shift that detracts from that is actually potentially going to have negative impacts on consumers and members and certainly not have Australia capitalize on the huge investment it's got having the envy of the world in our superannuation system. So I think it just defies logic to actually put constraints around delivery advice. I think the issues that we're doing with are not based on advice issues as such as multiple phases across an ecosystem, MIS schemes, auditors and so forth. So I know from discussions with our colleagues and with regulators and with others and even with some others on the industry fund side saying that they themselves don't want to put sand in the gears in terms of provision advice and access to advice. I think that would be negative for Australia or negative for Australians. And I don't think we'll see those sort of policies come up. You might see some uplift of the bar and codification of what's expected for people to deliver. I would see that as a welcome that. I don't think it's going to add significant cost. I don't know what the announcements are, but I'm certainly comfortable that we need to play our role. If the industry needs to adapt, it will continue to, as it always has. So I'm not expecting negativity from that. But again, I don't know what's being announced. But from our discussions, I'm fairly confident that there'll be sensible outcomes.

Operator  

Your next question comes from Anthony Hoo with Ord Minnett.

Anthony Hoo   Ord Minnett Limited

Just the first one, just on myhub, you're saying that you're rolling it out in this half. Can you talk a bit about any sort of revenue upside? What's the model there? What are your expectations?

Andrew Alcock   CEO, MD & Executive Director

Some of the stuff we're rolling out, and it will depend on the client group, and we're still working through the commercialization model for different client segments. For example, the advice review tool will be a product that we receive fees for and the software service. And so from that perspective, there will be some increments in revenue, but not sufficient to terms I would have thought in the short term. It is an incremental rollout things that features that you would expect a platform to have like an AI prompt around it. And so I think you should just model out our financials at the right answer follow the trend already.

Kitrina Shanahan   CFO & Joint Company Secretary

Yes. And I wouldn't -- we haven't baked in any particular upside in 2027 from increased commercial revenue from execute on the strategy. We're focused on executing the strategy and working with clients to make sure that we get that right.

Andrew Alcock   CEO, MD & Executive Director

I think the strategy is aimed at increasing flows and creating efficacy and winning more of our share in the future as well as some additional revenue.

Anthony Hoo   Ord Minnett Limited

That's great. And then second one, just in relation, just following up. There's been a little discussion already around your FUA target for FY '28 and talking about your assumptions around flows. But in the context of -- are you still adding or growing our adviser network very quickly. If I look at Slide 10, you've got the chart showing the yellow bids in particular, 14% from new advisers. So in that sort of context, why would you -- why wouldn't we be more optimistic around inflows growing because as those inflow -- as those advisers continue to mature, you would expect that to bring in even more inflows, right? And you're still growing currently as well. So I'm just wondering how do we think about -- how do you think about that as you continue to add more advisers, but yet the inflows are kind of -- you're talking about $18 billion to $19 billion, which is still sort of flat versus last year?

Andrew Alcock   CEO, MD & Executive Director

We actually do see inflows growing at the gross level. So if you unpack the net flow number as our base or our full balance grows each year, there's about 12% of outflows in pension payments and withdrawals. So actually, to hit those net flow numbers, you need to increase your gross rise by $4 billion or $5 billion a year to hit the same numbers. So whilst the net flows might appear to be flat. The gross flows actually have to increase to levels that others don't. In fact, our gross flows are industry record levels currently. And so it's uncharted territory. So assumed in that is gross flow increases. So we certainly hope to outperform that. We don't like to give guidance or outlook statements that we have to revise downwards. We certainly have to revise them upwards if we think so in the future as we've done in the past. So we take a fairly judicious approach to it, but there is assumed increases in gross inflows. And part of our job is to pay pension payments to allow people withdrawal. So that's the answer there in terms of when you unpack it. It's the 12% outflows of your base. So every year, you have more outflows and it's consistent. And they are industry-leading outflow numbers, i.e., they're very low outflow in others compared to peers. Okay, that helps on like that. Are you going to growing fee base and growing margin or growing earnings on that larger filler base, but your flow level is a story of in and out.

Operator  

Your next question comes from James Bales with Morgan Stanley.

James Bales   Morgan Stanley

I wanted to circle back to adviser behavior post budget. As a result of that, is there any change in your go-to-market, your product priorities or adviser education, is there opportunities in terms of market share or deepening relationships and finding solutions for these customers?

Andrew Alcock   CEO, MD & Executive Director

I'm sorry, I missed the start of the question. The...

James Bales   Morgan Stanley

Just post budget and the changes that have seen people waiting on legislation.

Andrew Alcock   CEO, MD & Executive Director

Yes. Look, as I said earlier, I think there's certainly a trend or a drive towards superannuation. We are the leading platform for super innovation inflows in Australia. In fact, we have the highest level of switching inflows across any super fund, including industry funds. That is with consumers who are choosing or members who are choosing to move their superannuation. So certainly, we are focused on strengthening that proposition, the efficiency and the outcomes. Hence, we're bringing the trustee in side, we see it as a core part of our business. So yes, in simple terms, our focus on super will continue and we continue to lead there. I think that's the best opportunity from that perspective. in terms of others, look, we will focus on other segments. We are waiting to see some more details on how the tax legislation goes. But there are other product opportunities, for example, insurance or investment bonds. Will they be more attractive moving ahead, and we're certainly actively working towards launching products that vein where you could have the 10-year concessional tax treatment, which will be a better outcome than sitting in the current structures that are there. So are opportunities to do that. We're active in that space as well as active in the superannuation space, and we will work with our customer base to look for solutions that maximize opportunities coming out of this.

James Bales   Morgan Stanley

And then maybe 1 quick follow-up. Just on the tax rate and the decline in '26, what should we expect looking forward into '27?

Kitrina Shanahan   CFO & Joint Company Secretary

So the expectation is that the tax rate will tick up again. The reason why it's low at the moment is just the timing. It's largely because of the purchasing of what we call treasury shares to service the employee share scheme, we had a large performance rights issue that we issued back in 2020 that vested last year. And so that really drove quite a large movement in the treasury shares. And so when you move into even you should expect the tax to come back into something with a 2 in front of it. So it should be in the sort of low possibly mid 20s for the tax rate.

Operator  

Your next question comes from James Bisinella with Unified Capital Partners.

James Bisinella   Unified Capital Partners Pty

Just getting back in the weeds, just keen to understand maybe the comment on the expense growth in the low to mid-teens range sort of just noting employee expenses were only up kind of $1.5 million in the second half. So I guess just trying to understand with some of that hiring more back weighted on the employee numbers and admin expenses did tick a bit higher as well. So a few moving parts. So just keen to understand a bit more detail there.

Kitrina Shanahan   CFO & Joint Company Secretary

Yes. So when you go forward to 2027, we gave guidance for the expense growth of 18 to 20, and we obviously landed right in the middle for full year '26. When we roll forward to 2027, we're not giving necessarily a final guidance like we did because it will come back to normal levels, which is low to mid-teens. The drivers of that is always to do with employee head count increases. The product head count increase will slow in '27 compared to the '26 rate, and so you'll probably see anywhere up to sort of around that 100 employee growth in line with the growth in the volumes that we see come through on both sides of our mature businesses, being the platform and the Class of NowInfinity side. But also CPI increases on our supplier costs and there's also increased. So as you mentioned in that administration place, line, you could see some upticks there, and that includes our external technology providers. and the same as every company, we have a real strong handle on our cloud costs and where they're going, but you can see some of that coming through in '26 and into '27. So they're the main drivers of the cost there.

Operator  

Thank you. There are no further questions at this time. I'll now hand back to Mr. Alcock for closing remarks.

Andrew Alcock   CEO, MD & Executive Director

Thank you, for coming along and for your questions. In summary, I just wanted to say, look, I think we are very, very well positioned. And whilst there's uncertainty, we're asking questions about the current IDPS and markets and so forth, we're hiring people we're investing. We see the thematic structural changes as beneficial for our customers and shareholders, and we're absolutely committed to continuing to do that as well and leveraging our market-leading position and our execution of strategy to continue to grow into the future and beyond. So we're very excited about what's ahead. Bumpy road may be for some. But certainly, we're focused on our strategy as always and looking forward to delighting you at our next results as well.

Operator  

Thank you. That does conclude our conference for today. Thank you for participating. You may now