The wealth management giant formerly known as IOOF, Insignia Financial, says it expects adviser numbers to stabilise in mid-2022 after announcing the loss of a further 118 from its network, 94 of those from the group’s self-employed channel.

In a quarterly busines update Thursday morning Insignia said it maintained active advice relationships with 1,765 advisers at the end of 2021, a number comprised of 890 self-employed advisers (-94 from September 30), 292 employed advisers (-11) and 583 self-licensed advisers (-13).

While the group has been busy onboarding advisers into its licensee ecosystem, it has been clear that practices that don’t fit its model in terms of profitability and process would go.

As has been the case with its contemporary AMP, most of the exiting practices are smaller, self-employed outfits. Fifty-nine of the 60 practices that left Insignia last quarter came from the self-employed channel and were “primarily smaller practices”, the group reports.

Key to the exodus of smaller practices from its five self-employed networks has been a reset of licensing fees back in October 2021, when subsidisations were removed for all including formerly ANZ-aligned advisers.

The Millenium3 network recorded the most adviser exits for the quarter (-25), followed by Consultum (-13) and RI Advice (-9).

“Most adviser departures came from smaller practices in the self-employed channel that were unable to transition to a new sustainable advice model,” commented Insignia CEO Renato Mota. “This contraction in adviser numbers reflects the necessary changes to ensure the financial advice profession can prosper after a period of change…”

The CEO noted that a “significant portion” of clients of advisers that left the industry were retained at Insignia.

“During the last 12 months, Insignia Financial has facilitated over 50 intra-group acquisitions and mergers as part of our adviser succession plan,” Mota said. “This consolidation not only aids succession and retention of clients and FUA, but improves the scale of advice practices, reduces our cost-to-serve and supports the path to break-even of our Advice business.”

At the group’s last annual results call in August 2021 Mota spoke of the group being at “critical mass” in its quest for scale, with the focus turning to honing its synergies and leveraging the benefits of its network – or, as he put it, “defining and extending the focus”.

Insignia expects the outflow to stabilise from July 1 this year as it completes the “repositioning” of its advice propositions.