Insignia loses self-employed advisers due to fee change
Insignia Financial (formerly IOOF) lost 118 advisers during the December quarter, largely through the loss of smaller practices in the self-employed channel as a result of the reset of management fees charged by IOOF to self-employed advisers.
In an announcement to the Australian Securities Exchange (ASX), Insignia said the number advisers in its network was now at 1,765 and the number of practices in the self-employed channel decreased by 59 to 480 at the end of December.
“This reduction in self-employed adviser and practice turnover is mainly the result of the reset of management fees charged by IOOF to self-employed advisers from 1 October, 2021,” Insignia said.
“The revised fee model removes historic subsidisation of fees and supports our target for ANZ aligned licensees to break-even on a run-rate basis by 30 June, 2022. The reduction in advisers for the quarter is consistent with Insignia Financial’s commitment to deliver to this break-even target as planned.”
Insignia Financial chief executive, Renato Mota, said the advisers who left were unable to transition to its “new sustainable advice model”.
“This contraction in adviser numbers reflects the necessary changes to ensure the financial advice profession can prosper after a period of change, while supporting continued investment in technology and process improvements, for the benefit of advisers and their clients,” he said.
“Where advisers left due to retirement or exit from the industry, a significant portion of their client books of business have been retained.
“During the last 12 months, Insignia Financial has facilitated over 50 intra-group acquisitions and mergers as part of our adviser succession plan. This consolidation not only aids succession and retention of clients and funds under administration [FUA], but improves the scale of advice practices, reduces our cost-to-serve and supports the path to break-even of our advice business.”
Insignia posted an increase of $4.2 billion to $222.7 billion in funds under administration during the December quarter while it lost 118 financial advisers. However, it said positive market movements of $5 billion were partly offset by pension payments of $730 million and reduced net outflows of $69 million.
It noted that net flows into advised platforms improved at $632 million, compared to outflows of $157 million in the prior quarter.
However, outflows from acquired MLC and pensions and investments (P&I) platforms registered signs of reducing following the delivery of product enhancement and strategic repricing initiatives.
The firm’s funds under management (FUM) rose $556 million to $98.8 billion over the quarter as market gains of $507 million were supported by net inflows of $49 million. Net retail inflows of $599 million were offset by outflows of $550 million from MLC’s institutional channel.
“We have recorded a significant improvement in net flows in the quarter, driven by inflows into key segments such as IOOF’s advised platform, and a significant decrease in the rate of outflows in the P&I and MLC segments,” Mota said.
“These results have been achieved amid an integration and simplification programme which is delivering planned synergies.
“The success of the migration to our Evolve platform, along with its scalable technology and enhanced user experience, cements its position as a key growth engine for the Group moving forward.”
The firm also noted the Insignia Financial brand would be rolled out group-wide in phases throughout 2022.
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