Insignia ‘pivots’ adviser strategy as numbers fall

Insignia Financial Group has published its half-year results for the 2023 financial year (1H233), revealing the underlying performance of Insignia’s advice business improved over 1H23 but continued to operate at a loss — $21.9 million (up 22.6 per cent).

Net revenue of $103.7 million was nullified by expenses totalling $128.5 million.

Notably, Insignia’s financial adviser network also declined, dropping from 1,765 advisers in 1H22 to 1,525 in 1H23.

But Insignia Financial chief executive officer Renato Mota revealed it was part of the company’s broader simplification strategy.  

“Removing that cross subsidisation and putting it in a more sustainable footing has impacted the numbers,” he said.

“We were aware of that going into this program of work [but] we thought it’s really important that the business is sustainable.

According to Mr Mota, this strategy has resulted in the loss of “smaller practices ” that were “subscale” in relation to Insignia’s “proposition”.

“We're doing more work with larger, more corporatised practices, so there’s definitely been a pivot,” he added.

“But that’s all in the interest of making sure it’s sustainable, and it’s the only place that we generate revenue from the clients paying.”

Insignia’s total group performance was also subdued over 1H23, reporting an underlying net profit after tax (NPAT) of $94 million, down 17 per cent from 1H22.

A 7.3 per cent decline in operating expenses ($517.7 million) was wholly offset by an 8.9 per cent spike in operating revenue ($691.3 million).

The firm delivered an interim dividend of 9.3 cps (50 per cent franked), down from 11.8 cps in 1H22.

The weaker underlying result was primarily driven by a 16.4 per cent decline in net profit generated by the platforms business, down from $141.5 million in 1H22 to $118.3 million.

Funds under management (FUA) — which includes workplace and personal super, and advisory super and investment funds — contracted 11.3 per cent from $227 billion to $201.3 billion.

Net flows improved, from outflows of $993 million in 1H22 to outflows of $142 million in 1H23.

Looking ahead, Mr Mota said he expects further market uncertainty in the months ahead.

“Anyone who you talk to today will say it’s a really difficult market to try and predict, and the market’s difficult to predict in the best of times,” he said. “…For us, that means being really clear on our strategy and executing the strategy.

“…I don’t try and predict what the markets are going to do, I try and build a business that actually is going to thrive in all market conditions.”