Open Architecture And Digital Platforms Will Shape Future Wealth Management

Key Takeaways

• Continued shift toward open architecture and outsourcing in wealth management positions Allfunds for sustained growth in platform adoption and high-margin revenues.
  
• Investments in proprietary technology and expansion in alternative solutions underpin operating leverage, global presence, and compounding structural earnings growth.
  
• Margin compression, slower revenue growth, rising costs, and intensified competition threaten both Allfunds' profitability and prospects for long-term structural earnings improvement.

Catalysts

Operates as a B2B WealthTech company that connects fund houses and distributors in the United Kingdom and internationally.

• Significant increase in demand for open architecture and cross-border fund distribution is accelerating, with Allfunds' market share rising to nearly 30% and structural penetration of open architecture at 58% across Europe-this positions the company to capture incremental net flows and revenues as the long-term shift from traditional, siloed models continues.
  
• Persistent digitalization and operational complexity in wealth management is causing more asset managers and distributors to outsource to specialist B2B platforms like Allfunds, boosting platform migration and onboarding (24 new distributors, 51 new fund houses in H1 2025), which should drive recurring, higher-margin revenue as operational reliance deepens.
  
• Growing global wealth, financialization, and increased appetite for alternative investments are leading to above-market growth in Allfunds' alternative solutions (AuA up 38% YoY), which command higher fees and are "stickier," likely supporting sustained outperformance in net margins and future revenue streams.
  
• Ongoing investment in proprietary technology, automation, and new digital products (ETP platforms, value-added services) enhances scalability and operating leverage, with management guiding for stable-to-expanding EBITDA margins and robust cash generation as revenues scale faster than fixed costs.
  
• Allfunds' strong, well-diversified pipeline (€250bn over 24 months), expanding Asian presence, and consistent onboarding from in-house/competitor platforms point to compounding effects on AUM and structural earnings growth, supported by the ongoing global migration of investment flows that favors multi-jurisdictional market leaders.

Allfunds Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Allfunds Group's revenue will grow by 6.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from -23.4% today to 26.8% in 3 years time.
• Analysts expect earnings to reach €215.4 million (and earnings per share of €0.38) by about August 2028, up from €-156.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €257.6 million in earnings, and the most bearish expecting €144 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.3x on those 2028 earnings, up from -23.5x today. This future PE is greater than the current PE for the NL Capital Markets industry at 13.2x.
• Analysts expect the number of shares outstanding to decline by 1.6% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.37%, as per the Simply Wall St company report.

Allfunds Group Future Earnings Per Share Growth

Risks

• There is increasing margin pressure on Allfunds due to a shift in asset mix toward lower-margin products like fixed income and money market funds, combined with migrations that arrive at lower average margins, which may compress revenue margins and impact overall net margins going forward.
  
• Subscription revenue growth, previously a key long-term ambition for Allfunds, has been downgraded to mid-single digits due to underperformance in certain segments (notably ESG), extended sales cycles, and project delivery delays; without a clear path to accelerated growth or improved profitability, this drags on future revenue and earnings growth potential.
  
• Rising costs-up 9% year-on-year and largely driven by technology investments, new initiatives (such as the ETP platform), and inflation-may outpace revenue growth if not offset by sufficient operating leverage or margin improvement, threatening EBITDA margins and net earnings in the long term.
  
• The competitive landscape is intensifying, with large infrastructure providers like Euroclear and Deutsche Börse expanding into the platform space and winning clients, potentially putting pressure on Allfunds to reduce pricing or increase investment, which could depress revenue growth and margins.
  
• Allfunds' slower client allocation to alternatives (still only 4% of allocations), combined with a cautious overall client approach to risk amid volatility, limits exposure to higher-margin products and slows the pace of structural earnings improvement that is necessary for sustained long-term share price growth.

Valuation

• The analysts have a consensus price target of €8.214 for Allfunds Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €12.86, and the most bearish reporting a price target of just €5.8.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €803.4 million, earnings will come to €215.4 million, and it would be trading on a PE ratio of 27.3x, assuming you use a discount rate of 7.4%.
• Given the current share price of €6.06, the analyst price target of €8.21 is 26.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.