Netwealth’s market-leading adviser platform continues to build market share as it gains advisers and investor clients

About Netwealth Group Limited

Netwealth Group Limited (‘Netwealth’ or the ‘Group‘) is the fastest growing wealth management business in Australia. The Group’s product offering comprises superannuation and retirement income products, investor directed portfolio services, as well as managed accounts and managed funds. Netwealth owns its proprietary digital platform which is widely acclaimed by wealth management market participants as being the market leader in terms of functionality. The Group has Funds Under Administration (‘FUA‘) of $88 billion and Funds Under Management (‘FUM‘) of $20.5 billion.

Strong net funds flow points to increased market share

Funds Under Administration (FUA) have increased to $88 billion as at 30 June 2024 on the back of a strong June quarter net funds inflow of $3.8 billion. This inflow is 38 percent higher than the previous quarter. The impressive quarterly funds flow has taken the annual increase to 25 percent or $17.7 billion, comprising net inflows of $11.2 billion and a positive market movement of $6.5 billion. The average FUA per account has increased to $611,000 as at financial year-end.

Managed account balances also increased during the 2024 financial year to $17.6 billion, an increase of $4 billion or 29 percent from June 2023. The total number of accounts increased by 5,293 or 3.8 percent for the June quarter to 143,251.

The continuing historically high RBA official cash rate is boosting the margin on the Netwealth cash transaction account. The Netwealth cash transaction account represents 6 percent of custodial FUA at 30 June 2024.

Netwealth’s proprietary market-leading platform is its durable competitive edge given the platform’s dedicated systems that assist advisers to manage their client base and access their client details. The platform was recognised as a market-leader when it was awarded the ‘Advisor Product of the Year’ at the Chant West Award event for 2024. In the most recent Plan for Life Industry analysis, Netwealth increased its market share to 7.5 percent for the 12 months to 31 December 2023.

Positive outlook

Higher interest rates generally don’t hurt income-conscious retirees and the current interest rate setting together with the refreshed administration service aimed at High Net Worth and Ultra High Net Worth market segments should continue to support funds inflow.

Funds management and funds administration services are highly scalable businesses and deliver significant operating leverage as funds inflow increases. Management have flagged that a number of significant transitions have commenced in the June quarter. While many of these transitions are at an early stage, management consider the funds inflow outlook for FY2025 to be highly positive.

Netwealth is debt-free with low future capital expenditure requirements and significant cash reserves. This supports the Group’s healthy EBITDA margin and high cash-backed profits generated from increasing levels of recurring revenue.

Shareholders can look forward to a consistent earnings performance over the medium term based on the robust FUA sales pipeline at 30 June 2024.