Online wealth manager Netwealth is to hold a second fundraising this year.
The company, which counts Jupiter vice-chairman Edward Bonham Carter, Betfair co-founder Ed Wray and Simon Dingemans, GlaxoSmithKline’s chief financial officer, among its backers, will look to raise an unspecified amount from both new and existing shareholders.
Netwealth raised £6.57 million ahead of its launch last May and CEO Charlotte Ransom (pictured) said the amount attracted in the second round will last the company ‘a long time’, although it is not known if it will carry it through to profitability.
Speaking to Wealth Manager shortly after the firm’s first anniversary, Ransom said it is now expected to turn cash flow positive upon reaching £1.75 billion of assets under management (AUM), down from the projected £2 billion at launch. Netwealth does not disclose its AUM, but Ransom said analysis of its one year data reveals that its average client size is now over £300,000, up from just over £200,000 earlier this year, and they are typically 51-years old.
She said the increase in client size is in part due to the volume of big ticket self-invested personal pension (Sipp) transfers it is receiving.
‘When we started, people were saying “I’m underinvested and have some money lying around”. Now over 60% of it is already tax-wrapped money because people realise that they can get it managed at a much lower cost than at other traditional wealth managers,’ she said.
The firm is also increasingly attracting corporate and charity clients, which is seen as another key avenue of growth.
The fact that Netwealth has a one year track record is expected to accelerate this. It runs a suite of seven risk-graded funds and its risk level four portfolio is up 16% versus the ARC Sterling Balanced index’s 12.2% rise over the 12 months to the end of May, while the risk level seven fund returned 25.6% versus 20.1% for the ARC Sterling Equity Risk index.
‘We are happy that we’ve had great performance and that the different risk levels have performed as expected,’
‘With corporate clients, some pension consultants often want longer track records, but we have got plenty that want to work with us. We won’t only rely on the D2C channel for asset growth.’
She added that the company is also in talks with a number of financial advisers about running their clients’ money on an outsourced basis. •