Insignia’s chairman, Allan Griffiths, believes the company has “stayed steadfast” in executing and delivering its strategic agenda and laying the foundations of a business with a competitive advantage. However, he candidly acknowledged that the firm’s current share price is a source of disappointment.
“We, as a board, have reflected on why the execution of strategy has not translated to an increase in shareholder value,” Mr Griffiths said.
Insignia’s share price hit a year high of $3.74 on 18 January, but steadily decreased to $2.07 on 23 November.
Mr Griffiths hinted that Insignia’s acquisition of MLC might have dampened shareholders’ confidence in the firm but added that Insignia is “committed to exploring every avenue to deliver sustainable value creation for the benefit of shareholders”.
“The 2023 financial year was the second full year of ownership of MLC, in what has been since the proposed acquisition of MLC, a three-year integration plan. We have remained disciplined in our desire to build long-term competitive advantage by investing in the core capabilities of the business, which will provide growth over the next decade,” said Mr Griffiths.
Also in financial year 2023, Insignia completed the separation of the pensions and investments business, exiting all transitional services provided by ANZ in October 2022.
“With these milestones achieved, we refreshed the business strategy in July this year and are confident it will deliver on growth opportunities over the next two to three years,” the chairman said.
Insignia’s forthcoming three-year strategy, scheduled to launch in 2025, is anticipated to yield financial growth, aiming for a cost-to-income ratio in the mid-60 per cent range within the span of three years.
In the context of positioning for future growth, the ongoing 2024 financial year is deemed pivotal by the board. The company highlighted a well-capitalised balance sheet and a clear, accountable strategy as key strengths.
As one of Australia’s major wealth management entities, Mr Griffiths anticipates Insignia will leverage its position in an industry expected to see total superannuation assets grow from $3.4 trillion to over $9 trillion in the next two decades.
Advice restructure
Also over the past 12 months, Insignia has witnessed a significant decrease in its advisory business from a quantitative perspective, a trend the company has attributed to a strategic shift in its operational approach. Responding to an inquiry from InvestorDaily’s sister brand ifa in September, an Insignia spokesperson said that deliberate and decisive steps taken throughout the year to “refine and realign” their advisory services have had an impact on adviser figures.
“From these initiatives, we saw a reduction in adviser numbers due to the closure of the Lonsdale licence and the integration of MLC Advice into Bridges and subsequent reshaping of the service proposition.”
However, despite these setbacks, the licensee is bullish on its advice restructure, which includes a new partnership model for its self-employed licensees comprising RI Advice Group, Consultum Financial Advisers, and TenFifty.
In an address to shareholders at Insignia’s AGM, outgoing chief executive officer Renato Mota said that the licensee’s new ownership model for its self-employed licensees will create “what is expected to become Australia’s largest adviser-owned licensee group”.
This, in turn, will provide Insignia with a “greater opportunity” to focus on the growth of its Professional Services Advice businesses, Shadforth Financial Group, and Bridges Financial Services.
According to Mr Mota, Insignia is two years into creating “Australia’s leading financial wellbeing organisation”, with 2024 set to be a pivotal year in the context of positioning the firm for growth in 2025 and beyond.
The firm’s new three-year strategy, he added, will prioritise initiatives such as streamlining the business, deepening partnerships with advisers and employers, and building a safe and trusted business.
“Simplification remains a key priority for us and is central to unlocking benefits of scale, reducing risk, complexity, and cost to serve. We’ve made a lot of progress in simplifying the business and setting it up for sustainable growth in the future,” Mr Mota said.
“As one of the largest superannuation fund providers in Australia, our scale, expertise, and unique combination of advice, platforms and asset management, is a source of competitive advantage.
“I’m confident we are building a business that is more relevant than ever and well positioned to take advantage of opportunities ahead.”
Mr Mota earlier announced he was leaving the firm after 20 years at the end of February 2024.
Addressing his departure at the AGM, Mr Griffiths said: “As you are aware, we recently announced by mutual agreement, current CEO Renato Mota will be stepping down in February 2024 after delivering the half-year results, after more than 20 years of service.
“While we acknowledge a change in leadership at such a pivotal point in time creates uncertainty, we have confidence in the executive team’s ability to deliver the necessary outcomes in 2024, allowing clarity and direction for 2025 and beyond,” the chairman said.
“We have an established succession plan and have commenced the search for a new CEO, and we will keep you informed of our progress.”
Looking ahead, Mr Griffiths added that he is confident Insignia can deliver on its strategy based on its track record of execution and said it will continue to execute on the opportunities its market position and capabilities provide.
The horse bolted four years ago guys….the disembling of the Bridges business, integration of the poorly performed expensive MLC and the forced exiting of the majority of Bridges advisors based on nothing but a personal internal animosity to this business has bought on this outcome…The Renato “ team” listened to no one