Netwealth sees boost as ‘elevated outflows’ moderate

Initiatives taken by Netwealth to stem outflows earlier in the year have been successful as it reports quarterly net inflows of $2.6 billion in the last quarter.

Reporting its quarterly results for the three months to 31 December, it said funds under administration (FUA) was $78 billion, thanks to $2.6 billion in net inflows and a positive market movement of $3.4 billion.

The net inflows are 25 per cent higher than a year ago when it saw inflows of $2.1 billion.

For the full year 2023, FUA increased by 24.9 per cent or $15.6 billion.

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In its results for the previous quarters, it had seen outflows of $3.1 billion in the three months to 30 June and $2.6 billion outflows in the three months to 30 September. This quarter outflows declined further to $2.3 billion.

As a result, the business took steps to stem the “elevated level” of outflows it was seeing by focusing on its new business pipeline and product suite. 

“In recent quarters, we have reported elevated outflows which were, in part, due to clients investing in term deposits and fixed interest products off platform. To improve the client experience and retention of assets on the platform, we delivered a number of initiatives, including new functionality and an increased range of fixed income products. 

“These initiatives (when combined with stronger equity markets) appear to have been effective with FUA outflows beginning to decrease and the December month being the lowest since February.

“Inflows for calendar year 2023 were at record levels, and we are confident that the range of new initiatives and products delivered should continue to reduce outflows, which we believe are largely driven by adverse market conditions.”

This has included a strategic partnership with iCapital on a global private market opportunity, expanded range of annuities, term deposits and cash funds, and a 31-day notice cash fund. 

For advisers, it offered flexibility to manage advice fees where advisers and clients can mutually agree to adjust or exclude advice fees across annuities, term deposits and cash funds.

It also added six BlackRock ESG managed models to meet demand for ESG and responsible investment options. 

Managed account balances increased by $1.3 billion to $15.5 billion, which comprised managed account net inflows of $0.6 billion and a positive market movement of $0.7 billion.

Grant Boyle, who has been the chief financial officer since 2017, has indicated he will step down this year. The firm said it has commenced a search process for his replacement. 

The firm will announce its results for the first half of FY2023–24 on 20 February.