In the cut-throat world of publicly traded equities, a CEO’s performance is often judged by the crude metric of share price performance. And, on that measure, shareholders may not remember Renato Mota’s tenure as chief executive of Insignia Financial fondly.
In the five years since Mota, who announced on Friday he will step down next February, was promoted to the top job of what was then IOOF, the company’s market value has continued to tank, falling 66.5 per cent over the period and trading at $2.14 a share at the time of writing.
To be fair, much of the damage had already been inflicted by the time he was handed the keys. Arguably the second most wounded Hayne royal commission witness after rival AMP, IOOF was facing multiple lawsuits – not just class actions from plaintiff firms but a rare litigation effort by APRA to have its chairman and top brass (but not Mota) disqualified from the industry. The fact the Federal Court eventually threw out the case provided a morale boost but little concrete salvation.
Mota has publicly admitted in the past he faced an additional hurdle in that AMP was a household name despite the royal commission, whereas the lesser-known IOOF had come to national prominence because of it. He denied it, but those public perceptions surely formed part of the reasoning behind rebranding the company to Insignia Financial.
In attempting to turn around IOOF’s fortunes, he faced additional challenges beyond the fallout from the company’s previous misdeeds. Mota was perhaps the highest profile business leader attempting to create a new affordable financial advice model for the mass market.
Over years, he gave glimpses of his vision for this new revenue stream, talking variously about financial coaching, more radical one-to-many fitness class-style advice and more vanilla general advice. It never became entirely clear where Insignia was going to place its resources and what this business would look like. Perhaps, if the Albanese government had more speedily acted on its pledge to implement some recommendations of the Quality of Advice Review, there might have been a window for Mota and his team to exploit.
While we have little clarity on the specifics of the low-cost advice model Insignia is brewing up, it is almost certain it would have benefitted from – most likely relied on – changes to the law.
Whatever his chances of executing on this new model, he deserves credit for trying. As the big four banks fled the scene, Mota was among the few public figures making the argument for law reform and, more importantly, for the value that professional advice provides to households and the broader social safety net. Of course, it was commercially motivated for Insignia and not all members of the profession would endorse a lighter touch regulatory regime or mass-market coaching model.
But nonetheless it was a case that needed to be prosecuted, especially after decades of media and political campaigns that targeted advisers (often blaming them for misconduct that occurred higher up the chain). Mota can justifiably claim to have been one of the voices who was helpful in getting a once-hostile Labor government to consider making life a bit easier for a battered profession.
Mota’s pro-advice stance was not just public positioning. Behind closed doors he is said to have been a passionate advocate for advisers and advice, according to sources with knowledge of boardroom deliberations. He was never at home in the funds management old school, which saw advisers as nothing more than a salesforce for their products.
Most of all, he will be remembered for his blockbuster $1.4 billion takeover of MLC. The long-term merits of the transactions are yet to be seen (and yet to be realised for shareholders), but to execute a mega-merger during a pandemic is something of an achievement and cemented his reputation as a dealmaker.
His more recent deal attempts have raised eyebrows, especially Insignia’s somewhat bizarre plan to sell its unwanted and unprofitable licensees back to his advisers as it pursues its goal of breaking even in advice.
Convincing Insignia advisers this transaction is in their best interests is one of many problems his successor will inherit as the leader of the nation’s largest financial adviser and one of its largest retail super survivors.
But if the next Insignia boss shares Mota’s passion for advice, willingness to engage in public debate and – at least from this editor’s experience – personal integrity, he or she will at least have a fighting chance.
Mota will be one of the last to die on that hill believing that shareholder interests and client best interest can work alongside each other. The repurposing of Bridges to be salaried tells you everything you need to know about corporate strategy. If the ‘aligned’ advisers won’t use your product because of perception issues, what’s the point of trying to own the whole value chain.
Insignia is a basket case and generally this starts at the very top and spreads down.