Platform migration causes adviser outflows for Insignia
The migration of the MLC platform to Expand caused disruption in platform flows for Insignia in FY24, as advisers “lost patience” with the migration delays.
The migration, which is part of the firm’s separation with NAB, was completed in March 2024 and affected $39 billion in funds under administration (FUA) and 94,000 customer accounts. The completed platform makes Expand the third-largest wrap platform by FUA.
Insignia said the migration delivered “tangible benefits” in a collective $13 million saved in administration fees per annum, an improved user experience for advisers, and a simpler way of working.
But it was not without its hiccups as chief executive Scott Hartley said delays caused “disruption” to its platform flows.
In the firm’s FY24 results, it said it saw platform outflows of $1.5 billion, with the majority ($1.3 billion) occurring in the second half of the year, much from the advised channel. This compared to $576 billion outflows in FY23; $142 million in the first half, and $434 million in the second half.
Outflows were partially offset by $1.8 billion, which was transitioned to the firm’s private label Rhythm in the first half of 2024.
Speaking on a shareholder webinar, Hartley said: “We saw successful migration of MLC Wrap to Expand. Ahead of this migration, we saw disruption to our flows to MLC Wrap as some advisers lost patience with the delayed migration.
“While it’s pleasing to see the improved flows since migration, we remain cautious in the medium term on the trajectory of advised flows and the expected one-off loss of a small superannuation admin agreement and FUA related to a historic divestment.
“We remain cautious on platform flows because we have some known one-offs ahead of us; the super fund admin arrangement which we expect will terminate in the next 12 months. We continue to see positive underlying flows, which is encouraging, but we remain cautious at this point.”
Its results clarified: “The successful and highly complex migration of MLC Wrap to Expand in March 2024 saw $39 billion of FUA transition to our contemporary technology. While the benefits of simplification will be delivered over several years, it now enables our main focus to switch to growth within the wrap segment in the advised channel.
“The opportunity to innovate and better serve the needs of advisers and customers becomes a priority, with enhancements to the product suite including adviser productivity, insight tools and functionality.”
During the financial year, Liz McCarthy was appointed as chief executive of MLC Expand, responsible for the wrap platform business.
Meanwhile, Hartley also clarified the reason behind the firm’s decision to pause paying a final dividend, which was attributed to “enhanced balance sheet and strategic flexibility”.
Hartley said: “We’ve purposefully called a pause. We haven’t changed the dividend policy. If you look at the timing of when we expect to be spending in FY25, we expect a significant amount of remediation to fall in the first half of FY25, and the bulk of our strategic spend, while the benefits of the cost-out tend to be weighted in the second half.
“Importantly, because there are further cost-out opportunities, then we want to be able to execute on those and that also takes funds. It’s too early to give a view on how long the dividend pause will be, but that’s our rationale.”
AUTHOR
Laura Dew
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