In its fourth quarter business update, Insignia Financial said it intends to reset its financial advice operating model to “competitively leverage opportunities for sustainable growth”.
The firm said that while this new business does not have a brand name locked in, it is being developed under the working name of Advice Services Co, or ASC. It will work as a new partnership ownership model for its self-employed licensees, which comprises RI Advice Group (RI), Consultum Financial Advisers (Consultum), and TenFifty.
“ASC represents the ambition to create Australia’s largest adviser-owned licensee group, positioning it to capitalise on the dynamic self-employed advice market with the support of Insignia Financial,” Insignia said.
“ASC will operate with independent management, oversight and governance, with input from both Insignia Financial as well as key advice practice representatives.”
The firm said that while Insignia will hold a majority stake in ASC at the outset, this will reduce over time as advisers are invited to receive equity in ASC.
“Insignia Financial’s continued shareholding will ensure alignment and commitment to the self-employed advice model through an ongoing partnership,” Insignia said.
“ASC will have a strong mandate to grow the number of advice practices and advisers operating under its licences.”
Commenting on the new partnership, Insignia Financial chief executive Renato Mota said: “This is a transformational initiative for our advice offering and will accelerate the return to profitability of our advice business, while ensuring our advice services model is positioned for growth as the financial advice industry continues to evolve.
“ASC will be owned and run for advisers, with the backing and support of Insignia Financial. The formation of ASC creates an adviser-focused licensee that can innovate in support of an emerging high-quality, self-employed profession.
“It also provides Insignia Financial with greater opportunity to focus on the growth of its Professional Services Advice businesses, Shadforth Financial Group, and Bridges Financial Services, expanding the scope of advice through superannuation, and the development of new technology-enabled advice delivery to leverage future opportunities presented by the government’s response to the Quality of Advice Review.
“The greater focus and specialisation of both organisations will lead to better outcomes for clients, making advice more accessible to more Australians.”
Insignia added that it would contribute staff, resources, and working capital to ASC and continue to support the new business under a transitional services agreement for 12 months from completion, which is expected to occur in the coming months. It will also provide a capped indemnity to the new entity for any historical remediation relating to conduct under Insignia Financial’s ownership.
ASC will be headed by CEO Darren Whereat, who is currently the chief advice officer at Insignia Financial.
The announcement comes less than a week after Insignia entered into an agreement to offload its $1.1 billion friendly society investment bond business through the divestment of IOOF to Australian Unity.
The deal will see Insignia paid a total consideration of up to $40 million, including $36 million in cash upon completion as well as an additional amount of up to $4 million payable in 12 months following completion subject to the transition of clients and funds under management.
Yeah, Run.
The problem is Mr mota you don’t have the strategic mindset to make the businesses profitable
To give you an example
One of the groups you closed on the premise that they weren’t profitable because you couldn’t control them ran 76 practices effectively won compliance awards and broke even in their first year and every year
How did they manage this?
they had a leadership team in the business that knew financial planning, strategic management and understood their customers (the advisers) importantly they were authentic in all their interactions
Human Capability is a huge word in leadership circles and at board level you seek out and embrace the futurists who can change the profits culture and people on a dime
Advisers want to join a licensee that culturally aligns with them, empowers them to help shape the future of the company, treats them as customers and equals amd above all is altruistic in their every day dealings with them
Sorry apart from one or two talented individuals who are not allowed to freely express their diverse ideas their is a lack of strategic acumen and no amount of advice restructures part 3,4,5 will get you the gold star
Until then the board school report will always say must try harder
Equity? In the new company? The business value of that company is the practices? And then those practices are invited to have equity?
Run
It wasn’t a profitable model inside Insignia, so makes sense that you shift it under a new name and entity and it becomes profitable, no thanks, smells funny
Advisers invited to receive equity???
AMP2.0
Different day, same….
OMG …. IOOF muddying the waters again to try and lifts its share price above its 10 year lows … why would any reputable AFSL want to join such a conflicted organisation??
Really, I think its great news!
yes, their ‘new’strategy is rebadge everything and hope we entice more people to join us and pay to flog our products.
Ha! Couldnt be any worse than going to court for 4 yrs to get a BOLR contract enforced
In fairness, I don’t think they are looking to attract new AFSL’s. They are looking to cast off the dead weight that is the Licensee model.