Iress developing the ‘next generation of advice software’

In a release to the ASX, Iress said it plans to develop the next generation of advice software.

Iress’ Group chief executive officer and managing director, Marcus Price, said the business is “committed to leading the development of the next generation of advice software, as well as investing in future growth in industry connectivity and data and analytics”.

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Citing figures from the Quality of Advice Review (QAR) that found 12 million Australians want advice but can’t access it, Iress said it aims to help advice firms that are seeking greater scale and profitability.

The software company added that regulatory tailwinds expected off the back of the QAR recommendations make it an ideal time to innovate in the digital advice space, adding that its in-development next-gen advice software will help “drive scale and accessibility across multiple segments”.

The business has forecast a Q1 2024 completion of its transition to platform architecture and its cloud optimisation program. It also said it would establish an innovation division to “incubate and accelerate innovation and grow organic revenue in core, as well as in new markets”.

Iress also said that it would implement a cost-efficiency program to deliver $32 million in annualised savings, which represents 10 per cent of headcount.

Excluding redundancy costs, the company said it will realise a benefit of $16 million in the 2023 financial year with the full benefit to be realised in FY24.

“Since being appointed in October, a thorough review of the Iress Group has been undertaken focused on increasing profitability and improving returns for shareholders,” Mr Price said.

“Our analysis has confirmed that the core of the Iress business is well positioned at the centre of the Australian wealth and trading ecosystem. These businesses are at, or close to, the ‘Rule of 40’ benchmark, defining leading global SaaS players.

“While Iress has loyal clients and enjoys high recurring revenue, more needs to be done to reinvest in the software and service we provide to deliver value to these clients. Additionally, there are aspects of the Iress portfolio which have diluted earnings, distracted focus, and reduced our ability to consistently deliver satisfactory returns on capital to shareholders.

Mr Price added that the cost-efficiency program is aimed at “reinvigorating growth in Iress’ core businesses” and will involve “executing a carefully managed program of work to deliver efficiencies and release capital across the group”.

“This includes commencing plans to divest Iress’ MFA and platforms businesses,” he said.

“With higher earnings and releases of capital, our objective is to reduce debt and reward shareholders with long-term, sustainable growth.”

In February, Iress announced that MLC Life Insurance and Praemium have signed memorandums of understanding (MOUs) to work on its Connectivity Network, which aims to connect platforms and insurance providers with advice software such as Xplan.