City heavyweights plough £10m into wealth manager

City heavyweights plough £10m into wealth manager

A group of City of London veterans have ploughed £10m into the latest fundraising round of robo-adviser Netwealth.

Netwealth describes itself as a low cost and disruptive wealth management business. The company offers general investment accounts, Isas and pensions. The money is managed on a discretionary basis, and mostly deployed into passive investments and ETFs. 

The company was founded in 2015 by Charlotte Ransom, a former Goldman Sachs partner who acts as the company’s chief executive, and Thomas Salter, a former managing director at JP Morgan.

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The company has raised £26.5m in three funding rounds since launch. Among those to back the latest funding round were former Conservative Party treasurer Michael Spencer, who founded City brokerage firm TP ICap, and former Jupiter chief executive Edward Bonham Carter.

Former Prudential chairman Harvey McGrath and Bruce Carnegie-Brown, chairman of Lloyds of London, were also investors.

Mr Bonham Carter is a director at Netwealth, as is the financial journalist Merryn Somerset Webb. 

Netwealth’s minimum investment level is £50,000 and a client with a pot of between £50,000 and 250,000 pays a "total fee" of 1 per cent, including the management fee, the fee paid to the underlying investment product provider and the cost of trading.

A client with assets of more than £500,000 pays an all in fee of 0.7 per cent. 

The company's latest set of financial results, which cover the year to the end of March 2018, showed it reported a loss of £4m, up from £3m in the previous year.

The company received £212,000 in fees in that year, compared with £36,000 the previous year.

In its statement confirming the latest fundraising, the company said the average portfolio size of a client as at September 1 2019 was £400,000.

The firm allows individual clients to group together as a “network”, and have the individual pots of assets treated the same as if it were one client, and so access lower fees.

The company said about 70 per cent of its clients are part of such a network.   

Ms Ransom said: “The latest investment, once again from such well respected and informed investors, is another positive endorsement of Netwealth’s vision and what we have achieved to date.

“Until now, wealth managers have been able to get away with putting their interests first, through high and opaque fees coupled with an outdated service. We are changing this reality. Our modern, client-centric and cost effective business provides clients with a genuine alternative to investing with the incumbents.”