Netwealth founder Michael Heine has big expansion plans, but finding staff will be an issue

Michael Heine’s wealth management platform Netwealth is aiming to grow to keep up with client demand – if he can find the staff.

Father and son Michael Heine, left, and Matt have big expansion plans for Netwealth. Picture: Stuart McEvo

Billionaire Michael Heine has big expansion plans for his fast-growing wealth management platform Netwealth. But he may run into a problem that looms as an increasing issue for Australian business: a lack of new staff to hire.

Heine’s Netwealth had a spectacular 2021 financial year in growth terms, as more money flowed its way from wealthy clients and financial advisers leaving the big four banks in the wake of the banking royal commission and other institutions exiting the wealth management industry.

Funds under administration increased almost 50 per cent to almost $50bn – and Netwealth is aiming to take that figure up to $60bn by the end of the current 2022 financial year.

Heine tells The Australian that his firm has “a huge pipeline of business” given it only has about 4.6 per cent of its addressable market at the moment despite its big growth in recent years, with competitors such as Macquarie, AMP, BT and IOOF still ahead of it.

So confident is Heine and his son and co-managing director Matt in their company’s future that they are hiring more staff, with a particular focus on building out its technology and back office team after the recent launch of a new client portal app for financial adviser clients.

Netwealth announced last week that it was going to expand its technology team by almost 25 per cent this year by hiring 35 staff in Australia and Vietnam, where it has a back office team.

The recruiting spree coincided with Netwealth’s 2021 financial results being revealed, with the company recording a full-year net profit after tax of $54.1m, a 24 per cent increase from the previous year.

Yet Heine says Covid restrictions on new workers and students coming to Australia will make the hiring process more difficult than at first glance.

“If you look at last year’s numbers, we had very little increase in non-IT staff, and yet we’ve been able to increase funds under administration by 50 per cent with very little back office growth.

“Yet there is a huge shortage of skilled people, particularly in the technologies that we are building, so it’s a big challenge to deliver our strategies. We need that [new] staff. And it’s hard work [to find them].”

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Michael Heine

• Age: 72
• Lives: Melbourne
• Estimated wealth: $2.46bn
• Source: Financial services
• Secret of success: Launching a wealth management platform as big banks exit the industry

Source: The List – Australia’s Richest 250

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Heine suspects he and other companies with similar growth strategies will have vacancies for longer than they plan. The perceived silver lining to that, he says, is that hiring fewer staff means less costs and therefore an increase in profitability. But that is not what he wants.

“Short-term profitability is obviously boosted but that’s not our desire. We’re wanting to make sure we’ve got the scalability of our infrastructure to make sure that nothing is going to crash and disadvantage our clients as we grow,” he says.

“So it just means that we have to put a greater effort into achieving those strategic objectives. But yes, it’s probably one of the biggest issues at the moment.”

Netwealth was established in 1999, but even by then Heine had worked around the world, including bartering commodities behind the Iron Curtain, for his late father Walter’s trading business, before making and losing fortunes buying and selling radio stations and commercial property in what has been a colourful and varied career.

Heine has previously joked that after a lifetime of building businesses, Netwealth is a 20-odd-year overnight success story.

But it has been proved a winner for him and his family, who own a large stake that accounts for the bulk of their wealth. Netwealth shares have trebled since the company floated on the ASX in November 2017, and are up about 11 per cent in the past 12 months.

Netwealth is also moving into a new headquarters in Melbourne, with a design Heine says should enhance collaboration, creativity and efficiency.

“We definitely want people back in the office, but we recognise there’s going to be a lot of remote work. We expect people to come to work, two to three days a week, when they can,” he says.

“One of the things happening now is people are on Zoom or Teams calls hour upon hour, so when a meeting finishes you move to the next. You don’t have that interaction so there’s a lot of burnout. You want to keep that entre­preneurial side and have that crea­t­ivity spark [an office] can bring.”