Renato Mota (left) and Darren Whereat

Insignia Financial will deploy a partnership model for its self-employed licensees, offloading equity in the troubled business to aligned advisers over time.

In an update to the ASX on Thursday morning, Insignia said the reformed structure would “reset” its financial advice operating model.

The new partnership model will affect three of its self-employed licensees: RI Advice Group, Consultum Financial Advisers and the amalgamation of MLC Wealth licensees known as TenFifty.

The identity of the new company is yet to be officially established and is currently under the working name of Advice Services Co, or ASC.

However, the ownership of Godfrey Pembroke is expected to directly be returned to the licensed advisers with Insignia retaining a minority stake, in a kind of management buyout that had long been considered even before then-IOOF took control of the former NAB subsidiary

Additionally, Insignia is “in discussions” with interest parties regarding the sale of former ANZ licensee Millennium3, while the closure of Lonsdale is almost complete with several advisers transitioning to Consultum or moving to their own AFSLs via the IOOF Alliances consulting business.

Insignia will initially hold 100 per cent of ASC, which it aims to sell off to authorised representatives of the two licences held by the business.

While Insignia CEO Renato Mota says there isn’t a specific target, the aim is to hold under 50 per cent of ASC and become a minority holder.

“It’s not lost on us [that] it’s a dense announcement,” he tells Professional Planner.

Mota said Insignia was interested in “a smaller slice of a bigger pie”, meaning the company’s footprint in licensing would reduce, but its appetite for providing services to advisers, and advice directly to consumers, would grow

“This is us wanting to share in the continued growth of our business but recognising the value that comes from partnerships,” Mota says.

Advisers in the network won’t be required to buy a stake in ASC and can continue to operate under their existing licensees even if they don’t buy in.

“They will be invited [to take an equity stake] and made an offer, some advisers may not accept that,” Mota says.

“We’re confident many will, but some may not. This is not forcing a change onto advisers. If advisers want to continue to leverage the licensee but not necessarily be exposed to the equity ownership or not interested in the alignment that comes from equity ownership, that’s fine.”