It’s difficult to say whether the leaders at IOOF – current or previous – would have done the deal to buy ANZ’s Pensions and Investments (P&I) business given everything that’s happened since it was first agreed to.

When asked directly, IOOF’s CEO, Renato Mota, who was group general manager of IOOF’s wealth business at the time, notes that assets do look different today than they did as recent as a year and a half ago, around the time revelations were tumbling out of the game-changing Hayne royal commission.

IOOF first inked the deal to buy the ANZ business, which includes RI Advice, millennium3, Financial Services Partners and Elders Financial Planning, in October 2017. The acquisition met its final approval hurdle more than two-years later, just a couple of weeks before Christmas.

“The strategy [IOOF based its acquisition of ANZ P&I on] is still relevant, but what’s changed is how you think about the governance of advice and superannuation – that changes how you think about costs, what you need to spend and where you need to spend it, so it changes the economics,” Mota explains, during an interview with Professional Planner at IOOF’s Collins Street headquarters in Melbourne recently.

The remaining big four banks (outside of ANZ) quickly distanced themselves from the heavily tarnished advice and wealth structures soon after the explosive royal commission findings were handed down. The banks either shut down or sold for next-to-nothing brands that in some cases had endured for decades and were treasured by many hard-working advisers. National Australia Bank’s MLC spin-off could be characterised somewhat differently to the other three and has yet to fully play out.

Buying wealth management businesses in the kind of fire-sale environment that has ensued might seem advantageous for acquirers, but nearly impossible to justify for compliance departments of scale seekers worried about what skeletons will appear while remediation efforts closely monitored by an emboldened regulator are in full swing. The $200 million indemnity CBA attached to the $2.5 million sale of its 35.9 per cent stake in the separately ASX-listed CountPlus – one of the few aligned dealer group sales completed post- Hayne – would have been unfathomable at any other time but accepted as somehow ‘normal’ in the current environment.

The ANZ deal came with its own contingencies; the company has since set aside a $233 million provision for advice remediation, and the eleventh-hour negotiation between the two companies delivered no less than a $125 million discount from the original $950 million sale price. In the end it’s possibly indiscernible who the winner will be in the context of this deal, although investors rewarded IOOF with a decent share price bump following the deal closing.

APRA’s failure to press its case before the Federal Court to disqualify Chris Kelaher and former chairman George Vernados certainly allayed some of the legitimate near-term risks associated with the company; whether the share market continues to harbor longer-term concerns over IOOF’s governance and duties to superannuation clients could be a question for the lawyers and market speculators.

For his part, though, Mota – a guy with a background as a deal maker both within IOOF for almost 17 years and previously in corporate advisory at Rothschild – is happy for the additional scale the ANZ platform and advice business brings to the business given the importance cost will play in the iteration of platform competition. Mota is also very realistic about the challenges that lay ahead for a so called “advice led” business still transitioning away from an old-world advice and product distribution model under the gaze of profit and revenue-hungry shareholders.

SELF-LICENSED CONUNDRUM

At the top of Mota’s mind is advice profitability and what models will work in the context of an institutionally-owned setting now and in the future.

Dealer group brands that proliferated in a world where institutions subsidised the cost of advice with product sales have come under close scrutiny by wealth executives across the board and IOOF is no exception.

“Is seven the right number? I’m not wedded to seven, four or 20. But our mantra is that if you’re going to be a standalone business, you must have your own value proposition. If your value proposition looks very similar to the guy next to you, chances are we’ll put you with them,” Mota says.

Bridges, Shadforth, Lonsdale, RI Advice, millennium3, Consultum Financial Advisers and Financial Services Partners are the enduring licensee brands within the IOOF stable, with the formerly ANZ-owned Elders Financial Planning already being subsumed into millenium3 towards the end of last year. Shadforth has an employed adviser model while the remaining six brands are self-employed advice licensees, although Bridges straddles the two models.