Asked whether he is satisfied with his tenure as chief executive of Insignia Financial, Renato Mota is sanguine.
“I’m leading an organisation that’s been around over 170 years and my job simply is to leave it in better state, acknowledging that the job is never done,” Mota tells Professional Planner. “Whether I was leaving yesterday, today or tomorrow, there is always more work to be done. So, I don’t leave with a sense of regret.”
Next Thursday, Mota will depart the organisation he helped establish through the mega-mergers of IOOF, ANZ Wealth and MLC Wealth, which formed the nation’s largest provider of financial advice and gave two major banks a much-needed exit strategy from their failed wealth management foray.
Looking back, he says the two monster acquisitions were “absolutely the right thing to do”, giving the then-IOOF the scale to be sustainable as it sought to repair its reputation following the damning Hayne royal commission.
Mota is expected to spend several months travelling with his family, before even considering his next move in financial services, corporate Australia or elsewhere.
But as he hands the reins to former AMP Australia and Sunsuper boss Scott Hartley, he urges his successor to continue trying to build a mass-market business-to-consumer advice model suitable for regular working Australians – an objective Mota had set for himself, but which was arguably hampered by the slow pace of progress on implementation of the Quality of Advice Review recommendations.
“I look forward to referring friends, family and anyone I can talk to this great organisation, knowing that there’s this great continuum of help, guidance, advice, support that they can access. And I sincerely hope that’s a vision that Scott and team can continue to pursue,” he says.
“The creation of the client well-being division is really the last piece of the puzzle for us as an organisation to orient and focus on the opportunities that provide.”
‘Don’t waste QAR’
He says there is “no doubt” that achieving the goal of a mass-market model would be made easier if the QAR was legislated, urging Insignia and industry peers not to “waste the opportunity” that reform – promised by the Albanese government – may bring.
The comments came as Insignia reported $95.5 million in underlying profit after tax (UNPAT) for the first half of FY24, but a statutory loss of $49.9 million due to “strategic initiatives and remediation”.
Mota says the result is a reflection of his willingness to “invest” in modernising products and procedures – something he says big banks NAB and ANZ were unwilling to do in the assets Insignia eventually acquired.
Earnings continued to improve in the troubled advice segment, which added $21.2 million UNPAT for the period but ended in a $0.7 million loss. Revenue was up 3.8 per cent due to Shadforth and Bridges client fee repricing and expenses were down 19.1 per cent as “optimisation benefits” were realised.
Adviser numbers experienced a 21.4 per cent reduction compared to the previous corresponding period to 1199, due to the sale of Millennium 3, closure of the Lonsdale licence and a round of redundancies within the Bridges salaried advice business.
‘Who wears the risk?’
Mota says “organic loss” from the financial advice business was very “modest”. But he acknowledges that the long-term outlook for traditional licensing is more challenged – and unlikely to be a strategic priority for Insignia going forward.
“I think that for self-employed advisers, the [traditional licensee] model makes a lot of sense. The question is, who does it make sense for to carry the risk and the burden of that and what are the economics around that?
“Our view is that, as an organisation, we are better deploying capital in other areas of our business than necessarily deploying capital in support of that model. But I can understand the existence of the model, and I think it supports a really vibrant part of our community.”
Insignia on Thursday confirmed it will sell the Godfrey Pembroke licensee it picked up in the MLC acquisition to the so-called Practice Development Group comprised of Godfrey member firms.
The transaction has been a source of confusion in the market, with ASX-listed Clime Investment Management indicating they had struck a deal in August last year to acquire PDG – the assets of which Insignia claimed it still controlled as owner of Godfrey Pembroke.
Notwithstanding the fracas, Mota says he holds that business “in high regard” and that a good outcome commercially for Insignia.
“We tried to work with them in a collaborative fashion to ensure that we were operating in a sustainable manner and they were in an environment that they felt was fit for purpose for them,” he says. “And in this case, it was about actually bending the business back to the advisers themselves and allowing them that independence, for lack of a better term.”
He says the adviser network is engaging positively with the so-called Rhombus project, under which the RI Advice Group, Consultum Financial Advisers and TenFifty licensee groups would be split off and sold to advisers belonging to those groups.
“[We] are now working feverishly to stand up the business to ensure that in [1Q25], as we’ve committed, that business is a standalone operational business, supporting its advisers, profitable and continue on its own growth trajectory,” he says.
Firmer foundation
Insignia’s share price jumped 12.6 per cent on Thursday morning to $2.54, but remains almost 60 per cent lower than it was five years ago.
The inability to increase the company’s market value came to dominate Insignia AGMs and dog Mota’s tenure as CEO, exacerbated by activist shareholders (including a number of former IOOF executives).
Asked whether these critics from the share register were a thorn in his side, Mota says it wasn’t a front-of-mind concern. He says he was focused solely on putting the company on firmer footing.
“I’m really pleased and proud of the foundations we’ve left for the organisation to continue growing in,” he says.
