Up to $291 billion worth of net assets could potentially be on the move following the acquisition of Class (ASX: CL1) by fintech company HUB24 (ASX: HUB) which is emerging as an investment platform of choice amongst high net wealth investors that have shifted away from the traditional broker model.

As of September 2021, there was $291 billion in assets being administered on the Class Super platform. At the time of the Scheme of Arrangement from HUB24, Class had just a $200 million market cap before the offer came at an 83% premium and has been unanimously recommended by Boards of both companies.

On the other side of the ledger HUB24 has a market cap 11x that figure (around $2.2 billion), while only having $63.2 billion in total Funds Under Administration, of which $45.4 billion was FUA on the HUB24 platform.

Given not all assets administered on their Class Super platform are applicable to HUB24’s equities market, there will not be a simple lift and relocate process for FUA. But based on Class’ latest SMSF Industry Benchmark Report, only 3.9% (or $11.3 billion) of the $291 billion are managed on the HUB24 platform, highlighting the synergy opportunity.

Over the past three years, Class has undergone a major transformation from being just a developer of SMSF software to a complete wealth management solutions developer. This has seen the launch of Class Trust to accommodate administration and management of trusts.

Growth in the Trust administration market is highlighted by the $3.5 trillion of wealth to be transferred from the baby boomer generation to their beneficiaries over the next 20 years with Trusts acknowledged as the most effective vehicle.

Since first targeting this market, customer numbers have soared across the business for the Company to have more than 7,800 unique customers using a Class product. This represented more than a 400% increase compared to 2019 when they undertook the ambitious strategy to diversify beyond SMSFs across the wealth management sector.

In doing so while gathering attention across its core client market for Class’ cloud-based products, HUB24 saw the distinct opportunity that Class presented where the two companies now share a common trait in elite technology stacks.

HUB24’s platform offers a comprehensive range of investment products, with enhanced transaction and reporting solutions, for all types of investors – individuals, companies, trusts, associations or self-managed super funds.

Using the platform, investment vehicles are able to gain access to a wide range of domestic and international investments where they can trade within the platform that holds the capital as Funds Under Administration. This is a space that has been undergoing major disruption from tech-focused challengers such as HUB24 that have been taking market share away from financial institutions that had previously been housing the majority of ‘old money’.

This focus on their tech stack for the purpose of better user experiences (UX) follows the same mantra as Class which has long been the market leader for SMSF administration.

In the coming years, that $3.5 trillion transfer of wealth is going to be falling into the control of significantly more tech-savvy beneficiaries, relative to the Baby Boomer generation.

This new generation of high net worth investors have grown up with Google and have learned to make investment decisions without the traditional stockbroker model – the exact market that HUB24 caters to with their comprehensive range of investment products.

As of March 2021, large financial institutions had 81.40% of the investment platform market but that has been declining steadily since 2014, experiencing net outflows of over $14 billion in the past year alone as more beneficiaries choose to manage their wealth via investor-focused platforms like HUB24.

For the quarter ended 30 September 2021, HUB24 set a new record of quarterly platform net inflows of $3 billion from 3,200 advisors using the platform.

That could jump significantly upon settlement of the Class acquisition expected around February 2022, opening a door to the 7,800 customers using a Class product.