At Netwealth, we aim to make investing a family affair and have gone one step further by allowing clients to invite their partner, children, siblings and friends into their ‘Network’ – while each Network member’s portfolio remains independent and private. Once in the Network, the percentage fee clients pay is based on the combined value of their contributions, not on their individual pots. As is typical for wealth management, the more you invest generally means you pay less as a percentage.
Pool assets – for lower fees – but keep individual savings goals
The Netwealth Network was born out of a wish to help families. It’s a powerful tool to help people invest efficiently across the generations – clients can now invite up to 9 people to join them in their network, for a total of 10 members.
Aggregating assets helps to drive down annual fees, while each member of the Network can still pursue the financial goals that best suit their age and objectives. Their client accounts remain completely separate and private from one another – allowing individuals to choose the investment mix (through portfolios) they prefer, and take as much or as little risk as they wish. What’s more, the minimum investment amount, which is usually £50,000, drops to £5,000 for a Network member.
Most individuals are typically much better off by investing with Netwealth compared to a traditional wealth manager – who often charge up to 2% or more to manage your money, as this FT article highlights. However, once in a network the rewards grow even more.
If Mary opens a Netwealth account with £190,000, she would pay an all-in annual fee of 1.05% – already far lower than the average UK wealth manager's charge. If she then invites her partner and a parent to the Network and they add an ISA of £95,000 and a SIPP pension of £215,000 respectively, the fees would drop to a reduced all-in annual fee level of 0.90%.
Mary’s son could also be added to the Network and open an ISA for £5,000. This sum falls well below the minimum investment threshold set by traditional wealth managers, meaning he would generally be unable to invest in this way at all. Yet in the Network he would still pay the same 0.90% as the rest of the group and can increase his savings from as little as £100 a month.
An illustration that shows the differing impact of fees
As we have highlighted many times before, lower fees can make a substantial difference to your financial outcome.
In the example above, the family Network is paying Netwealth all-in annual charges of 0.90%. For the purpose of illustration, we can show how these fees of 0.9% a year versus a common cost of 2% a year can make a difference to the family’s combined pot of £505,000.
Assuming an annual investment return of 5%, in a year the family would save £5,555 compared to those paying higher wealth manager charges to invest. It is over a longer timeframe, however, where this saving becomes especially compelling. Over 20 years – thanks to the power of compounding – the family would have £215,889 more to spend than if they paid 2% in fees.
The level of growth in any portfolio is, to be clear, mostly due to the interaction of market conditions and effective portfolio management practices – such as the efficiencies gained by how we invest. Yet members of the Network benefit further from thousands of pounds extra in their pockets by clubbing together.
The freedom to invest more efficiently
Our family Network offering is unique in the UK. No other provider currently offers a single aggregate fee level across family members and friends, while still allowing each individual account holder to pursue their own financial goals. This capability is why over 75% of our clients choose a Network to make their financial pots more efficient.
Nell Butler has three generations in her Netwealth Network and says:
“We all have investments with Netwealth. We benefit from lower fees as a result of the family network while our individual accounts remain private. Everything is transparent which means even someone like me, who is normally frightened of financial matters, feels in control.”
Find out how you can benefit from more control, pioneering technology and a better investment experience – and why many clients like Nell choose the Network for their families and friends. Just get in touch.
Please note, the value of your investments can go down as well as up.
