In an overhaul of the business, Iress has announced a 10 per cent staff reduction, refreshed leadership team, and the divestment of its Managed Fund Administration and platform services.
In an update on Thursday morning, Iress said the MFA and platforms businesses, originally part of the acquisition of OneVue, is no longer strategically aligned to the future of the company which wants to be a neutral player in the platforms arena.
Iress CEO Marcus Price tells Professional Planner the MFA and platform business was part of the digitally invested infrastructure business strategy the company initially thought was a necessary part of producing an end-to-end digital experience.
However, he adds this no longer appropriate with the Connectivity Network having been launched late last year which aims improve integration between tech providers.
“The difference is now we have that participation with other parties like Praemium, CFS and others who are signed up [on the Connectivity Network] and ready to work on it,” Price says.
“In that sense it’s no longer necessary. It complicates us participating in the interconnectivity part of the industry, so we want to provide a connectivity platform between all of the advisers using Xplan and all the various broking networks.”
Finding new connections
Iress announced the Connectivity Network last November which included memorandums of understanding signed by CFS and MetLife Australia, with MLC Life and Praemium coming on board in February.
“We’re competing with the people we need to be part of the network and it was complicating the take-up of the infrastructure piece – the part that we felt was the most important and solved the biggest problem for advisers,” Price says.
“We’re not going to be a product owner or wrap to make sure people are happy to participate [in the connectivity network].
“It makes us Switzerland,” Price says, referring to the historical neutrality of the landlocked European nation.
“We just want the network to exist; we don’t want to be a participant in our own network. It’s confusing strategically to some of our customers like Netwealth, HUB24 and others. We don’t want to compete with those guys. They’ll do what they do, and we’ll do what we do.”
Peter Worn, the joint managing director of wealth tech strategy specialist Finura Group, says the MFA and platform business is a significant roadblock to the Connectivity Network that has been moved.
“You can’t be a participant and a market maker,” Worn says. “That was something I could never personally understand about the strategy. It’s still going to be a challenge for Iress to get all of the platforms to collaborate the right way.”
Worn says the announcement reinforces that Iress is focused on strengthening and protecting the key parts of its business.
“There’s some positive messages for the local market – maybe Iress will be a little less distracted than what it’s been with all these international operations they’ve had,” Worn says.
“There was an openness to admit they’ve not necessarily delivered on the customer promise in the local market.”
All the changes in the business are part of the steps the company has undertaken to improve the functions of the business following the appointment of Marcus Price as CEO last year.
The company has been conducting a review of the business, including re-shaping how it conducted business overseas.
In a media-release on Thursday morning, the company described the 10 per cent headcount reduction would reflect “a more efficient and focused organisational structure” and roles targeted for redundancy are not expected to impact client services.
Price says the firm has been growing costs faster than revenue for the past few years.
“We need to be more efficient so we can keep our pricing more constant; we can’t keep adding costs and jacking up prices,” Price says.
However, he adds the company will hire more staff to support other projects and the redundancies are for roles that don’t fit in the changing business strategy.
As identified by Price in February, Iress reiterated its plan to re-invest into Xplan, but will also launch a new “innovations division” to expand the business.
The new division will include investments in the development of next-generation advice technology to help the advice, explore AI opportunities, as well as the expansion of Iress’ connectivity capabilities in wealth and trading including Xplan Affinity.
In addition to the planned employee reduction, Iress has restricted its leadership team which will commence from the start of the upcoming financial year.
Iress has appointed four new CEOs to lead various divisions – Harry Mitchell will lead wealth management, Jason Hoang will cover trading and market data, Paul Giles will lead superannuation, and John Harris is in charge of the managed portfolio division.
Each subsector has full “end-to-end accountability” of product, technology and support functions to streamline and enhance the client experience.
The company has also appointed Ana Smith as chief transformation and strategy officer, and David Hentschke as chief innovation officer and Justin Schmitt as chief operating officer.
However, chief product officer will not be part of the new structure and incumbent Joydip Das will depart the company.