In its quarterly business update, IOOF said the result had come about due to two advice practices from ex-ANZ licensees leaving the group and taking $155 million in client money with them, while 12 smaller practices with $115 million funds under advice between them had also left.
Inflows were flat across the quarter as the advice business struggled to attract new clients amid the uncertain economic environment, IOOF said.
IOOF also gave an update on its advice remediation costs, which it said were approximately $223 million.
The group said remediation provisions relating to the ex-ANZ licensees would increase by $80 million, but this would be offset by funds received from ANZ to cover the remediation.
“The increased provision is a consequence of change in methodology relating to adviser categorisation, which now aligns to that used by IOOF,” the group said.
However, IOOF said if there were to be any further increases in the provision amounts, ANZ may not cover these.
“Separate to any remediation program agreements, ANZ has provided a capped indemnity regarding certain claims by clients made by October 2022 for various types of adviser conduct prior to the completion of the acqusition by IOOF,” the group said.
Nearly every licensee is cleaning up their book- rather have 1-2 practice groups with $115m FUM than deal with 12 painful ones. Reality of new advice world.
Did these advisers establish their own AFSL or move to other licensees that do not own product. ?
So if the adviser left an IOOF owned licensee and switched people’s IOOF super and pension to a “better” super fund then why were they at IOOF in the first place? If I was at ASIC, would that not be a red flag to a bull?
I think what is implied here is that the FUM left the Licensee NOT the product. Therefore clients would not be switched from one product to a “new” product on mass.
If IOOF can’t get additional remediation from ANZ, the self-employed IOOF planners may want to follow these ANZ departures because IOOF won’t be looking to generate this income from their own employed planners.
You break it, you should pay for it.
Former ANZ planners needed to push One Path product. Now they are under pressure to recommend IOOF platforms and funds.
No Gary, they’re not.
12 practices were moved on resulting in a loss of $115m FUM. Would expect more of this from all organisations that want to run commercially viable models.
These aren’t advisers that have just decided to leave. IOOF has made the conscious and deliberate decision to exit them, with more to follow. It comes across as if advisers are bailing from IOOF when that’s not the case. IOOF are just deciding on the best ones to retain.
or is it a case of rats fleeing a sinking ship
No Roboadviser, the bulk of them were booted so they wouldn’t have a sinking ship!
I remember when Financial Wisdom did a similar thing in their adviser shake-up a few years ago. When the advisers were booted out, they switched their clients to a new new product. As a result Financial Wisdom threw them all under the ASIC bus to further sabotage their businesses and keep their clients. Coincidentally all those clients started receiving letters from Financial Wisdom offering a “free review by a CBA Financial Planner”
IOOF is the new Storm Financial – wait for it!
They have to raise their fees to pay off borrowings for the ANZ acquisition for which a high price was paid.
Make it good, make it quick and if necessary make it up!!!
The actual headline of the ASX statement was FUMA grows to $202.3 billion up 3.4% for the quarter. But that perhaps would have got you less clicks onto your story? Quality journalism as usual.
Yes; but the strong market bounce would have been responsible for that growth!
Flows v FUMA. Both matter, but valid to comment on flows – quality, trend, etc.