In mid-2020 Insignia Financial acquired the Wealth Central financial advice technology platform with the intention of improving adviser efficiency and productivity.
The purchase, part of the then-IOOF’s “Advice 2.0” makeover was somewhat buried under the news that it was also acquiring MLC from National Australia Bank. Nevertheless, IOOF chief executive Renato Mota touted the advice tech acquisition as “the next-generation digital tool [which] significantly enhances client and adviser experience by streamlining the advice process and increasing the productivity of face-to-face engagement”.
But things move quickly.
Four and a half years later, Mota has been replaced by Scott Hartley; IOOF has rebranded as Insignia; it has sold the Godfrey Pembroke license back to its advisers and spun-off the RI Advice and Consultum licenses into Rhombus Advisory (but retained the Shadforth and Bridges licenses); and Hartley says he’s rethinking the business’s advice technology strategy.
Hartley says Insignia is considering substantial investment, “either fixing what we currently have or finding something better to transform to”.
“Our advice tech at the moment is not where it needs to be,” Hartley says.
“Our advice process that operates with that tech is not efficient, largely because of the tech, not totally. That’s another area of serious investment.
“We acquired it, and then we adapted it, within Shadforth, Rhombus advisers and Bridges. That’s still with us. But we’re going to evolve and improve that for the benefit of not only Bridges and Shadforth, but also Rhombus advisers as well.
“To be honest, there’s a bit of just stepping back and in that space, stepping back and having a real think about renovating what we’ve currently got or replacing what we’ve currently got.”
Advice is an area Hartley says will also benefit from Insignia’s expanding engagement with and investment in artificial intelligence.
Hartley says he sees “a huge opportunity for generative AI” in improving functions and processes.
“We’ve been doing AI for a long time, data-driven, robotics AI, and we have been dabbling in generative AI,” he says.
“But generative AI has a significant role to play in our industry, from both an efficiency perspective but also a client engagement perspective.
“We are seriously doubling down on that, with our focus being three domains to begin with: advice, wrap and marketing.”
Last week Insignia announced it had signed a master services agreement with SS&C to outsource administration of its master trust business, potentially reducing costs to Insignia by around two-thirds.
While this won’t address the traffic flow issue directly, it will underpin Hartley’s drive to make the business significantly more efficient. Insignia and SS&C signed an initial agreement in December last year, and it represents the largest single element of a simplification and cost reduction program that’s been in train since before he joined the business in March 2024.
The SS&C deal will see around 1400 Insignia staff transition to the technology provider.
“To give you some idea, ultimately the run-cost for us when we’re fully transitioned, and SS&C in their in their models have got years of recovery for the cost of them transitioning for us, we end up at a third of our current costs for that functionality,” Hartley says.
“Initially, they’re going to be operating on our tech, but the target state is Bluedoor, which is contemporary technology built by Australians for the Australian market, but has since been adapted internationally. The biggest, or the most notable of that was St James’s Place in the UK. They operate on Bluedoor, and AMP North operates on Bluedoor, so it’s good tech, and I know it from my AMP days.”
Hartley says the SS&C deal is “by far and away the biggest” element in “an optimisation program, which was in existence when I arrived”.
“The next biggest would be the continuous development of the wrap capability, which is well in train and progressing really well,” Hartley says.
“Wraps, by their nature, [are] technology businesses.
“That requires constant reinvestment – $20 to $30 million a year – and that will continue to happen every year from here on in. That’s going to evolve, but [to] a very, very competitive platform.”
Insignia is currently subject to interest from three competing private equity (PE) investors, each of which has lodged an indicative, non-binding offer for the business, valuing it at around $3 billion. While Hartley declines to comment on the specific offers, and says there’s nothing he can add to what’s already on the public record, he says he does feel “somewhat vindicated” that the strategy he’s mapped out is the right one.
“We talk about this internally a bit, but I’m happy to say it here: PE firms weren’t interested us when the share price was $2-something and there was a lack of clarity about what the business was, where it was going, how it was going to get there,” he says.
“Obviously, putting the vision and strategy out late last year has encouraged more PE interest, and they’ve had a good look at and gone, OK, this looks interesting. And so [I feel] somewhat vindicated, I guess, that we’ve got a compelling vision and plan that others are interested in, investing in participating in, and that’s nice. But a deal is at this point is highly uncertain as well.”
Sorting out the traffic flow in its master trust segment is part of the ongoing program of work Hartley is overseeing to streamline and make the Insignia business more efficient. He says it is the business’s “clearly stated ambition to be the most efficient wealth management company in the country”.
“Absolutely, in my mind, that’s table stakes for survival and sustainability,” he says.
Hartley says Insignia’s master trust or superannuation division “has been bleeding pretty badly over the last probably five, six years, even longer, perhaps”.
“There are clear things that we have done and will need to do to arrest that,” Hartley says.
“The biggest part of the market for churn in superannuation is consumer direct, by far. So for super funds – AustralianSuper, ART, us – MLC Super – the biggest churn in the market is individuals choosing a different fund, making their own choices. And we don’t have an ability for people to join us directly.
“Our members who decide to go somewhere else go somewhere else. But for members who decide to come to us, there’s no way in right now. There is, but it’s pretty hard work, [it’s] not easy. That’s an example of an investment we need to make to be able to fix that problem.”
In its 1H25 results released to the ASX on 20 February, Insignia
reported a net loss after tax of $16.8 million for the half-year, compared to a loss of $49.9 million in the previous corresponding period, following a modest increase in revenue and ongoing cost savings.
Adjusting for one-off items – mainly related to its separation from National Australia Bank, and redundancy costs – it reported an underlying net profit after tax of $124 million for the half, compared to $95.5 million in the first half of FY24.
