Insignia Financial, formerly IOOF, reported a net profit after tax of $36.2 million for the first half-year, a drop of 33 per cent on the previous corresponding period.
In an ASX listing on Thursday, the wealth giant said its underlying net profit after tax reached $117.9 million, up 79 per cent.
Insignia’s FUMA increased by $7.1 billion to $325.8 billion in the six months to 31 December, driven by strong market returns and an “encouraging” improvement in net flows during the second quarter.
Applauding Insignia’s first results since the name change, chief executive officer Renato Mota outlined the firm’s focus over the half, including the integration of MLC and the reshaping of the advice business to ensure its “long-term sustainability and profitability”.
“While our name has changed, our ambition remains to improve the financial wellbeing of all Australians,” Mr Mota said.
“The financial results for our first full six-months of MLC ownership are strong, with significant improvement in UNPAT and revenues, and we have executed on our strategic priorities whilst continuing to simplify our business and deliver improved client outcomes.”
Addressing Insignia’s adviser departures, Mr Mota labelled the previously steep losses “inevitable”.
“We have taken the actions of repricing our adviser licensing fees, and together with cost reductions, we will have the acquired ANZ self-employed adviser business at a sustainable break-even position, on a run-rate basis, by the end of June 2022.
“We are also addressing the cost-reductions required for the MLC advice channels to achieve a sustainable run-rate basis by the end of FY24,” explained Mr Mota.
“Inevitably we are seeing some adviser losses, particularly as smaller practices are challenged by the new industry settings. Pleasingly, we are retaining significant amounts of advised clients from advisers that are retiring or leaving the industry within our advice network.”
Insignia currently boasts 1,765 advisers, up 14 per cent on the corresponding period, while revenue earned per adviser sat at $463,000 in the six months to 31 December.
Looking forward, Insignia expects adviser numbers to decline driven by continued focus on practice sustainability as well as uplift in professional standards.
“Our open architecture model and scale means we are increasingly well-positioned to address the evolving and complex needs of Australians across their life-cycle, in order to support broad-based financial wellbeing,” Mr Mota concluded.
