Financial Planning
Netwealth FUA, adviser numbers rise

A number of financial advisers who flocked to wealth management institutions for Netwealth as a result of the banking Royal Commission have helped boost the platform's funds under administration by 30% to $23.3 billion.

Financial results for the end of June 2019 released this morning shows the financial services Royal Commission had an overall positive effect for Netwealth, which saw after-tax net profit jump by 64.7% to $34.3 million.

However, independent non-executive chair Jane Tongs said after the Royal Commission made its final recommendations, including the phasing out of grandfathered commissions and regulatory requirements for intermediaries, Netwealth voluntarily conducted an internal review with reference to matters identified during the hearings.

"This review identified matters involving client rectification costs and legal expenses of $1.1 million. Our commitment has always been that when we make errors, we rectify them," Tong said.

"The board is committed to always acting ethically, being transparent and accountable. These attributes are essential for the long-term performance, sustainability and success of Netwealth."

Meanwhile, the Royal Commission also led to a number of financial advisers from major wealth management institutions moving to Netwealth services as those looking to change platforms continued to increase. About 75% of net inflows came from existing adviser clients.

Joint managing directors Matt Heine and Michael Heine flagged that the firm is focused on expanding its whole-of-wealth solution to affluent, high-net-worth and wholesale clients.

"While our superannuation products lead the market and have grown strongly, we have also experienced significant growth in our Investor Directed Portfolio Service (IDPS or Wrap account) which now represents approximately 60% of our FUA and 70% of our annual net inflows," they added.

They pointed out that pricing has received a lot of attention in the industry as of late.

Over the period, Netwealth's platform revenue over average FUA decreased to 48.1bps, from 53.4bps in FY2018, they said.

"A more important measure for Netwealth is the average revenue earned per account which increased by $55 to $1,460 per account during FY2019. A key driver of this increase was the increase in the average account size to $323,000 per account at year end. Larger accounts typically earn higher transaction and ancillary fee income as these clients desire higher functionality."

Netwealth's managed accounts FUM reached $2.8 billion, up 50.4% year on year.

It declared a fully franked final dividend of 6.6 cents per share.

Read more: NetwealthRoyal CommissionJane TongsMatt HeineMichael Heine
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