Like any CEO of a large listed entity, IOOF’s Renato Mota knows the annual results call is going to be a big day.
“Someone said to me recently the days are long and the weeks are short,” he tells Professional Planner shortly before a conference call with analysts and media. “But I feel privileged to represent the efforts of 5,000 people who have tremendous belief in what they do.”
It’s been a hectic 12 months for Mota and the IOOF team. The group finalised the MLC deal in May and brought 405 advisers into the fold, completed most of its Advice 2.0 restructure and scaled up its Evolve investment platform. All of this while still incorporating the ANZ adviser network.
According to Mota, doing it all at once hasn’t been easy.
“The trickiest piece is doing all those things simultaneously,” he says. “But there’s been a lot of robust planning and support mechanisms been put in place to ensure we can hold ourselves to account, and I take great comfort from the expertise we have in the business.”
In a perfect world, would Mota prefer more time to bed down the ANZ influx of advisers before tackling MLC? Like most things, he replies, there are pros and cons to the way it panned out. It’s been a struggle, but the synergies make it worthwhile.
“It does allow us to build one program and do both in one consistent manner, and in a way that allows us to take the learnings out of both organisations,” he says. “One plus one doesn’t equal two in terms of effort.”
On the subsequent conference call with media Mota says the opportunity to combine the ANZ and MLC programs was worth taking. The MLC transition is much bigger, “but the complexity is similar across both”.
Synergies, along with scale, seem to be the guiding mantras at IOOF these days. Mota says the company is at “a point of critical mass” with regards to scale and has enough to support its ambitions.
So far, at least, the signs are positive. The FY21 results show a 31 per cent increase in revenue to $770M despite only having MLC on board for a month or so, with an underlying net profit after tax (UNPAT) increase of 19 per cent to $147.8M.
Net profit after tax (NPAT) was less positive, with a $143M loss largely due to non-recurring costs associated with the planned termination of its deal with BT for platform administration services, MLC integration costs and the cessation of grandfathered commissions.
Defining and extending
From here, IOOF will be intent on honing its synergies and leveraging scale; or, as Mota puts it, “defining and extending the focus”.
Consolidation of platforms will be a major target, with the group looking to shift funds off its half dozen or so legacy platforms and add it to the $22B of FUM in its Evolve platform.
There is also work to be done amalgamating the various tribes associated with the dealer groups IOOF has acquired. Mota knows he has to let adviser cohorts like Godfrey Pembroke retain some of their identity while they warm to the IOOF community.
“One of the reasons we’ve been deliberately multi-brand is we need to recognise cultural or sub-cultural idiosyncratic fraternities,” he says. “This isn’t a homogenous industry and the differences are a real strength of the industry.”
And yet, he’s astute enough to know where to draw the line. Individuality won’t be allowed to come at the expense of reasonable efforts to harmonise and simplify the group’s compliance regime.
Anything that isn’t, as he puts it, “additive to the business”, should be under review.
“We’ve always supported an open and diverse approach with respect to advice,” he says. “You want to support diversity in terms of thinking but in some aspects complexity can hold us back, [while] simplifying systems and products can help build a sustainable business.”
One million potential clients
In the medium to long term, Mota says the real opportunity in advice for IOOF is linked to the one million unadvised superannuation members the group now represents.
Of all the major super funds, IOOF’s combined superannuation fund business is the only one in the “mega-pack” that is advice led.
There is a “natural link” between super and advice, Mota says.
“Preparing for retirement is an important financial obligation but it is not the only financial obligation people have,” he says. “It’s a fantastic opportunity for us to have a conversation and cater to those other needs. Yes, we want to make sure we build a leading super capability, but we equally see that there’s an opportunity for broader conversations.”
Does this mean the group is targeting its own member base for products based on a form of robo-advice? Not exactly.
“I wouldn’t say robo-advice because that means different things to different people, but using scalable technology in different ways to help with knowledge, advice and investment, just having a conversation with members,” he says. “There’s a massive opportunity with respect to what we call our unadvised membership in our super funds.”