Netwealth has reported elevated levels of outflows in the last quarter, though it has chalked this up to cyclical challenges in the macro-economic environment and maintains a “very positive” outlook.
The platform reported funds under administration (FUA) outflows of some $2.6 billion, down from outflows of $3.1 billion in the previous quarter.
“Outflows for the quarter are at elevated levels, though we note that more than 50 per cent of these outflows are non-fee paying FUA,” it said in an ASX statement.
According to Netwealth, the outflows related primarily to clients partially withdrawing funds to invest in off-platform investments, including term deposits and other fixed income investments; and large partial withdrawals from high-net-worth and large accounts.
“Whilst the current macro-economic and interest rate environment creates some short-term challenges and, as outlined above, has led to a period of elevated outflows, we believe this is cyclical in nature and maintain our very positive outlook,” it stated.
“Our new business pipeline and conversion remains strong, our client satisfaction remains high, and our market leading product suite and service ensures we continue to attract substantial inflows from existing and new clients across all our key market segments.”
The platform saw FUA increase by some $1.7 billion for the September quarter to $72 billion, comprising FUA net inflows of $2.1 billion and negative market movement of $0.4 billion.
FUA increased to $13.9 billion for the 12 months to 30 September 2023, marking a rise of almost 24 per cent.
It noted “strong underlying inflows and new client wins” in its record 12-month FUA inflows of $18.8 billion.
Netwealth also saw managed account net inflows increase by 118.3 per cent or $0.4 billion for the quarter, which it attributed to the successful launch of 24 new managed account models in the September quarter.
Responding to changing adviser and client demand and the economic environment, the platform noted its expanded investment menu, including alternative investments and a suite of income options.
This includes its small parcel bond service in partnership with Income Asset Management Group (IAM), providing access to bond parcels at an entry point of $50,000 compared to the $500,000 usually required; the relaunch of its core product offering 41 managed models; and its expanded range of term deposits and annuities.
“Netwealth will shortly make it possible for advisers to exclude term deposits, cash and annuities from their fees to support client returns,” it added.
Additionally, in the quarterly update, Netwealth announced its new strategic partnership with global fintech platform iCapital.
“Netwealth’s new strategic partnership with iCapital will provide a unique private market offering to Australian investors,” it stated.
“iCapital offers an extensive menu of private investments, including equity, credit, real estate, infrastructure and hedge funds.”
The partnership will also include product support to Netwealth through iCapital’s in-house research and diligence team, and a bespoke suite of educational tools.
