Wealth Market's Matt Lawler, IOOF's Darren Whereat and Clime's Rod Bristow

IOOF has rejected accusations that it has abandoned its ‘Advice 2.0’ promise to eliminate product subsidies from its licensing regime after it was revealed the new owner of MLC Wealth offered discounted licensing rates to advisers it hopes to bring across to its own licensees.

As word circulated yesterday that IOOF offered discounted rates to advisers from MLC’s TenFifty licensee brand, as well as up to $10,000 for transition expenses, criticism filtered in from licensees who believe the soon-to-be largest wealth manager in the country is diverging from a conflict-free platform.

Matt Lawler, CEO of Wealth Market, says that if the offer is funded by product subsidisation – which IOOF have had vowed to get rid of – then it has failed as an industry leader. Lawler is a long time executive in the wealth industry and held senior positions at NAB and MLC before a stint as CEO of Yellow Brick Road and GM of OneVue.

“It’s that ‘kicking the can down the road’ analogy where they want to [have a clean model] but they delay what they believe in to secure the MLC guys,” Lawler tells Professional Planner.

Even if the offer to advisers is not being funded by product subsidies, Lawler says, and IOOF is willing to run licensing at a loss in the short term to build scale, it still sends the wrong message.

“My point is that the money – whether it comes from product or anywhere – is better spent building services and technology for advisers, rather than being a sign-on fee or a grab bag,” Lawler says. “It creates a culture of advisers who have their hands out.”

Nathan Jacobsen, the chief executive of Paragem, the licensee owned by platform provider HUB24, says he also has reservations about the move.

“I understand IOOF’s decision and why they would offer support to MLC advisers after insisting they would change the license,” Jacobsen says. “But equally I’m concerned about the message it sends to the market; it reinforces a culture that exists – and is slowly disappearing – that advisers can be bought and sold.”

‘Just offering certainty’

IOOF head of advice, Darren Whereat, denies that the firm is backtracking on its promise to extricate product subsidies from its books.

“We are absolutely on track to eliminate product subsidies by the end of this year – there is no change to the objective outlined by Renato [Mota] as part of our Advice 2.0 plan.”

All IOOF is doing, Whereat argues, is offering to continue the discounted pandemic relief pricing that TenFifty had already promised its advisers. The overall licensing cost advisers coming over to IOOF will pay is roughly similar to what other licensees are offering, he notes, once insurance and software is taken into account.

“We will offer that the TenFifty advisers can simply keep what they’re paying, which is a discounted Covid relief rate, for two years. However, they’ll need to pay PI insurance and Xplan separately, so when you add it all up it’s comparable with what most licensees are charging. We won’t be running at a loss. There are no freebies, we’re just offering these advisers certainty,” Whereat says.

The actual offer to advisers is yet to be formalised, he points out, but should come through over the next week or two.