$8 billion in new FUM, 20K new accounts and a massive runway ahead, says Netwealth CEO

Netwealth (ASX: NWL) delivered a strong first-half result on Wednesday, with solid numbers across the board - strong net flows, expanding margins, and more than 20,000 new accounts, a first for the company.

Netwealth has chosen to report adjusted numbers this half, stripping out the First Guardian impact, a shadow that CEO Matt Heine acknowledged, over what was nonetheless a “fantastic period” for the company.

"It was a tale of two cities," Heine said of the last six months. "To quote Charles Dickens, it was the best of times and the worst of times."

The numbers to watch

Markets tend to fixate on net flows, but Heine notes that flows alone don't tell the full story.

"Net flows really are a good indication of the future health of the business and the momentum of the business. But ultimately, what net flows doesn't actually provide is the real health of the underlying business."

What Heine is prouder of is his ability to convert those flows into profit. 

“Where we’ve been, I think very successful over many, many years now, is actually converting that net flow into profit and ultimately very strong EBITDA margins.”

A platform scaling with its clients

Along with the more than $8 billion in flows, Netwealth reported more than 20,000 new accounts over the period. 

Heine says a structural driver for this is existing advisers becoming more productive over time.

“What’s fascinating, to us anyway, is that around 90% of our inflow every year actually comes from what we call existing customers,” Heine said.

Rather than relying on constant onboarding, Netwealth is deepening relationships with advisers already on the platform.

"Those advisers that have been using the Netwealth platform for many, many years are becoming more efficient. They're adopting new technology... and they're therefore able to take on more customers."

This compounding efficiency is a key strategy for Netwealth.

“One of our big objectives and goals over the next couple of years is to help advisers from servicing around a hundred family groups to 130 to 150, and ultimately maybe even 200,” Heine said.

AI enters the chat

Artificial intelligence is part of that productivity push. “AI is clearly front and centre for pretty much every investor at the moment,” Heine said.

Heine says they have been investing in AI for many years now and have been applying AI internally to operational processes, with good results. 

“We’re seeing great efficiency in the back office, streamlining process, document automation, data extraction - that is very much part of our day-to-day cadence and how we're thinking about AI.”

The company is also rolling out a customer-facing chatbot in the coming months, with sentiment monitoring built in to hand off to a human agent if a conversation goes sideways.

More exciting for Heine is the longer-term opportunity in using Netwealth's proprietary data - "a very unique and very large" data set - to deliver better insights to advisers and their clients, which Heine expects will deliver "a real moat to our business now and well into the future."

Market share gains - only one piece of the opportunity

Netwealth has been a consistent beneficiary of advisers leaving legacy platforms. But Heine believes the addressable market remains far larger than platform switching alone.

“The platform market is very large. It currently sits at about $1.2 trillion and is growing organically at around 10%.”

More interesting is the demographic tailwind reshaping Australia’s advice landscape. As wealth accumulates and financial needs become more complex, investors are moving away from single-product super solutions toward integrated advice structures.

“There are major tailwinds coming from a demographic perspective, which are pushing more and more Australians that have complex advice needs to seek advice.”

That migration, often from industry funds into advised, multi-structure portfolios, represents a structural, not cyclical, growth driver.

The broader superannuation pool itself is expanding rapidly, with Heine noting it is “looking to grow to about $6 trillion by 2030.”

Expanding the addressable market again

Beyond advice-led platform growth, Netwealth is also targeting adjacent revenue pools. Its new broking and individual HIN offering is now in a soft launch phase, aimed at capturing additional client assets.

“We think it unlocks a TAM [total addressable market] of around $600 billion,” Heine said.

This marks a shift from pure platform provider to a more comprehensive wealth infrastructure business.

Looking forward to the next 12 months, Heine says to expect more of the same:

"We're in a fantastic position. We've got lots of new products and features coming out to support our advisers and to drive efficiency and we would expect to really be capitalising on the opportunities that we've talked about."