Netwealth profit hit by First Guardian costs

Netwealth reported record underlying earnings and funds under administration in FY26, though its statutory result was weighed down by $74 million in after-tax costs related to the First Guardian Master Fund collapse.

The platform provider incurred a $71 million post-tax compensation charge for affected members, alongside $3 million in legal and professional fees related to First Guardian.

The cost follows the Federal Court's declaration that Netwealth Superannuation Services and Netwealth Investments contravened the Corporations Act in relation to First Guardian after failing to obtain and assess sufficient information about the fund and make adequate independent enquires into its risks.

Netwealth agreed to compensate affected members in full, with more than $100 million paid to more than 1000 investors in January.

Excluding the First Guardian expenses, Netwealth reported a 20.6% increase in total income to $391.1 million, while EBITDA rose 18% to $192.9 million. NPAT increased 16.2% reaching a record $135.4 million.

Netwealth chief executive and managing director Matt Heine said the business had maintained strong momentum while investing in its platform and governance capabilities.

"FY26 was a strong year for Netwealth. We delivered record funds under administration (FUA), strong gross inflows, continued market shares gains and attractive earnings growth, while maintaining our disciplined approach to investment and execution," Hein said.

Total FUA increased to 20.3% to $135.7 billion while net flows reached $15.4 billion. Client accounts increased 12.4% to 182,276 and financial intermediaries rose 5.9% to 4205.

Netwealth also said it had materially uplifted its investment governance capability during the year, including through its Reviewing Investment Standards and Excellence program.

The platforms market share increased to 9.7% up 98 basis points, while managed accounts FUM climbed to 27.9% to $34.6 billion.

Netwealth enters FY27 targeting FUA net flows of between $18 billion and $20 billion and an EBITDA margin of about 47%, as it expands into private wealth and broking.

Heine said the company remained focused on its longer-term "Dx30" ambition of doubling FUA on the platform over the next four years.