IOOF head of advice, Darren Whereat (Image: TS)

He’s running what will be the biggest network of advisers in the country, but Darren Whereat downplays his involvement in the $1.4 billion deal that brought MLC Wealth into the IOOF fold.

“I don’t want to overplay my role,” Whereat says, deferring to the work of CEO Renato Mota, COO Frank Lombardo and and chief legal officer Lawrence Hastings in securing the deal.

Whereat’s role moving forward, however, is a large one. As head of advice, the industry veteran is charged with making the acquisition of its longstanding arch-rival worthwhile, which means getting as many of the 500 or so Garvan, Apogee, Meritum and Godfrey Pembroke advisers to come across as possible.

To make things easier, he’s armed himself with a simple strategy. “Don’t guild the lily and don’t put any fluff around it,” he says, “Tell it like it is.”

Getting buy-in

For those outside the negotiation room (or zoom room, as it were) Whereat says the MLC deal would have come as a surprise. In order to convince as many of the MLC-licensed advisers to come across, he knows he has to do some explaining.

“Until the last 48 hours we probably haven’t been on many of their radars,’ he tells Professional Planner.

There is a lot on the line for IOOF, who will take over from AMP as the biggest wealth manager in the country if all MLC advisers come across. In truth, AMP’s downsizing program and ongoing adviser outflows mean this was just a matter of time anyway. Far more important than sheer numbers for IOOF, however, will be the scale more advisers create; if all goes well IOOF could hit over $500 billion in advice assets under management.

According to Whereat, it’s about more than numbers. He’s looking for buy-in.

“We want the people that ultimately join us to do it for the right reasons, not because it’s part of a transaction,” he says. “We’re confident that we’ll get a good majority but we want to get them for the right reasons.”

The advice head isn’t taking the allegiance of MLC advisers for granted. He’s aware that if advisers are being forced to change their licensee – which could necessitate the rigmarole of new SoA’s, administration systems, branding, etc – many will see it as a catalyst to canvass the broader market.

At the forefront of his mind would be the Viridian deal with Westpac, which gave them inside running on the advisers cast adrift from Securitor and Magnitude. Of the 400 advisers available, Viridian nabbed about 100, while most became self-licensed or migrated to licensees like Fortnum, Centrepoint and Oreana.

“We’re not arrogant enough to think we’ll get everybody,” Whereat says. “They don’t automatically come across as part of the transaction.”

The self-employed advisers, in particular, will approach the decision ahead knowing they can easily go elsewhere. Whereat is acutely aware of this, and knows they will pose his biggest challenge. There is a nuance in the transaction that shouldn’t get lost, he reckons: “Self-employed advisers always control their own destiny.”

Godfrey Pembroke advisers will also need to be convinced to across as a brand sans the license – a dynamic the industry is likely to see more of – while Garvan, Apogee and Meritum advisers will be asked to cancel their consideration of MLC’s fledgling TenFifty brand and cast eyes over IOOF’s incumbent stable.

Then you have ongoing remediation concerns, and in the background, BOLR agreements.

The task ahead is complicated, so Whereat wants to start by simplifying it. The pitch to advisers, he explains, begins with a clear explanation of how IOOF operates and what their value proposition is.

“They want to know why we think we can make it work,” he says. “The conversation then becomes: ‘What does this means for me? Show me your tech. Demonstrate how you do compliance and supervision. Show me how I operate in your ecosystem’.”

There is little hubris in Whereat’s approach. He knows that like any relationship, people need time to figure out how they feel and acceptance isn’t a fait accompli.

“We don’t know all the answers and we haven’t planned for every nuance,” he says. “We need to listen to what’s important to them. We know how to do advice and we know we have a great offer, but we need some opportunities for them to get to know us.”

Culture, compliance and conflicts

Wheareat is open about some of the key issues that define the culture of the advice group including conflicted remediation, governance and purpose.

As the soon-to-be largest advice group in the country, he acknowledges concern that IOOF could be viewed as another vertically integrated behemoth, leveraging its outsized adviser workforce as a proxy distribution network to funnel product.

“If you look at the flows of the organisation you’ll see that the vast majority are not going to inhouse products,” he says, noting that the group has an open architecture model that allows for an even spread of products and platforms.

On product subsidy payments to licensees, Whereat says they will be “run out of P&Ls” by the end of the year, in line with the last remaining grandfathered commissions as part of their Advice 2.0 initiative.

“Renato is on record saying 2020-21, the AFSLs will stay on their own two feet [and] be paying their own costs,” he says. “And it’s absolutely the right thing to do.”

The price of licensing will rise, he says, but this is in line with the rest of the industry. “I think we’ve seen everybody moving towards raising prices for the advisers and the reality is we too have done that,” he says.

One trend IOOF is not adopting is the move towards high-fee-paying clients at the expense of lower tier ones. Whereat reckons intra-fund advice and technology can help bridge the advice gap and keep mums and dads within reach of the industry.

“Most of the good work advisers do is in middle Australia,” he says. “If advice becomes only for the rich I think we’ve failed in our duty to help every day Australians.”

Asked how IOOF will retain the culture of its group while bringing in such a large new cohort of advisers, Whereat says the key is to not lose sight of your roots.

“You don’t look at the shiny new toy at the expense of the existing advisers, you need to make sure you’ve got your eyes on both things,” he says.

The MLC transaction is slated to be completed by 30 June next year. He knows this is a crucial period for IOOF, but he’s also aware the advice landscape is evolving rapidly; anything could happen, including the break-up of other advice groups – like AMP – that could change the game once again.

“Whether that happens or not, who knows?” he says. “The reality is 12 months is a long time in financial planning these days.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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