Insignia Financial will move on low-fee-paying customers under Bridges with the advice businesses looking to cement its ongoing fee model.
This is part of the integration of MLC Advice into Bridges and the reshaping of the service proposition is expected to result in a short-term revenue reduction.
Insignia CEO Renato Mota tells Professional Planner the group is pitching the new Bridges – which is an amalgamation of the two businesses – as an ongoing fee offer.
“Bringing the two together was an opportune time to have a look at the book of business, the clients, the propositions and there is a portion of the MLC business coming across that falls out of that,” Mota says.
“Having said that, the reason we’ve made that decision in the short term is because we see growth opportunities in the medium term. Part of this is about positioning the offer in a way that allows us to grow going forward accepting that means some change in the short term.”
Last August, Mota announced the former ANZ advice businesses Insignia had acquired reached break-even status. A similar goal has been set out for the ex-MLC business which is expected to be completed by FY24.
Insignia is the largest licensee in Australia and the only one with over thousand advisers.
On his outlook for the near future of the profession, Mota remains consistent in view that he can’t think of a better time to be in advice.
“I say that taking a medium outlook or macro perspective, and the macro perspective is the world is getting more complex, people need more help, more assistance,” Mota says.
“There will always be a portion of the population that will want a humanistic approach; there will be technology and AI and other things but there’s a strong demand for that personalised relationship and you’re making a meaningful impact on people’s lives.”
When two becomes one
Simplifying the platform business continues to be a key focus for the organisation and the results of a full-market review of master trust software solutions found a two-platform ecosystem will maximise benefits to members.
The company is currently in the process of finding a third-party software provider for the master trust products and expects to provide a further update on the chosen platform solution and strategy in the near future.
Insignia’s previous target was to focus on having one or two platforms, but Mota says they specifically have landed on two being the right number.
“Because of the different nature of some of our product offerings you’ve got the Wrap platforms specifically targeted to the advisory channel and the master fund offering,” Mota says.
“There are operational differences there that warrant having two systems and that’s a more effective way for us to run our business. In that regard we can buy it, build it or rent it and having looked through the whole market there’s a strong rationale to partnering with a third party to help us design that master fund operating environment.”
Insignia’s in-house system Evolve is up and running, and will continue to transition more legacy products during the year.
“It’s one we own ourselves and there are benefits of doing that yourself,” Mota says.
“That being said, with a master fund we could build that out ourselves, but we see a merit with partnering with a best-of-breed provider to help us bring those benefits to our clients more quickly.
Platform inflows in the first half of the financial year improved by $811 million despite $267 of outflows during the last quarter.
Net inflows of $160 million into retail asset management funds were offset by $191 million outflows from the lower margin Institutional channel.
Done deals
The group has also completed the sale of the Australian Executor Trustees (AET) business, along with offloading its 45 per cent stake in investment researcher and consultancy firm JANA.
The JANA stake will be sold to JANA management, making it a wholly management-owned business. The other 55 per cent of the company had previously been acquired from MLC Wealth in 2017.
AET was sold to EQT Holdings at the end of November with proceeds of the $130 million deal after costs being used to reduce debt.
Funds under management and administration was just over $285 billion at the end of year, an increase of $7.4 billion on a continuing basis but a decline of $7.1 billion after the divestment of JANA and AET.
