IOOF has announced a headline $1.3 billion net outflow for its financial advice division in the three months to December 2020, with CEO Renato Mota declaring the financial impact of the loss “not material”.

“We are making good progress towards the transformation of the business,” Mota explained. “In particular, we are transforming the advice business through our Advice 2.0 strategy and progressing our platform simplification strategy, while supporting IOOF’s open architecture approach and enabling choice for our clients.”

IOOF state the $1.3 billion is a result of its “era-defining” Advice 2.0 project, which was announced by the group last year concurrent with the news that it would purchase NAB’s MLC business.

IOOF’s transformation project was expected to result in a dip in funds under management in advice as the group reshapes its network, shedding advice practices that don’t fit the new model before completing the MLC acquisition in July. Mota said 22 advisers with $869 million in funds under advice left IOOF licenses in the period due to various reasons, “including some practices that we don’t view as economically sustainable under our future advice model”.

The CEO also noted that practices totalling $363 in FUM chose to become self-licensed yet continue to use IOOF services – though this number was excluded from the $1.3 billion total. “Advice 2.0 has resulted in changes to the way that advisers choose to utilise IOOF’s services,” Mota added.

The group also noted the effect of the pandemic, including the government’s early release of superannuation scheme which saw 10,800 requests for a total of $80 million withdrawn.

“This quarter has seen ongoing impacts of ERS, especially the final opportunity for early access,” Mota stated. “As well, we have experienced the ongoing impacts of COVID, including client concern and uncertainly around ongoing and potential economic impacts.”

IOOF was able to tout a strong quarter otherwise, with a $12.7 million uplift in total FUMA (Funds under Management, Advice and Administration) being offset largely by the one-off $8.1 billion termination of it’s platform arrangement with BT.

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