Scott Hartley

Insignia Financial (ASX: IFL) is pleased to announce the appointment of Scott Hartley as Chief Executive Officer (“CEO”) of Insignia Financial.

Scott joins Insignia Financial following an extensive search to replace Renato Mota, whose departure was announced in late October. Scott will commence in his role as CEO on 1 March 2024 and will join the company from 26 February 2024.

With over two decades of experience in the wealth management sector, Scott has a breadth of industry knowledge, most recently serving as CEO of AMP Australia. Prior to AMP, Scott was CEO of Sunsuper and led MLC’s corporate and institutional wealth businesses.

Commenting on the appointment, Allan Griffiths, Insignia Financial Chairman said:

“Scott joins at a pivotal point in the business and his appointment is key to providing a fresh perspective as we continue into the next phase of executing on our strategy.

“Scott’s deep experience and strategic leadership will be critical as we continue to build on our established foundations and move forward with clarity and focus on the opportunities our market position and capabilities provide.

“On behalf of the Board I would like to welcome Scott and look forward to working together. I would also like to express my gratitude to Renato for his 20 years of service and dedication to the organisation, five of which as CEO.”

Incoming CEO, Scott Hartley said: “I am honoured to be chosen to lead Insignia Financial and excited to be joining Insignia Financial at this transformational time as it builds upon its strong foundations to support Australians to achieve greater financial wellbeing.

“Insignia Financial is uniquely positioned in the industry, with capabilities in advice, platforms, superannuation, and asset management, and a strong client focused culture which can be leveraged to create value for all stakeholders, including shareholders, clients, advisers, and members. Insignia has an exciting future and I look forward to working with the Insignia team to accelerate execution of Insignia’s strategy.”

Scott will also join the Insignia Financial Board as Executive Director.

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Renato Mota

The priorities of Australians have changed, with financial independence now the nation’s most common aspiration, according to Insignia Financial’s inaugural Financial Freedom Report (the Report). The research, commissioned by Insignia Financial and conducted by social research agency, McCrindle, explores the aspirations of Australians across generations, genders and demographics.

In what appears to be a shift from the past, the most common aspirations held by Australians today are achieving financial independence (55%), followed by taking regular holidays (50%), maintaining a good work/life balance (45%), home ownership (45%) and building a trusted group of family and friends (44%). When it comes down to it, Australians are now more inclined to pursue their dream life (60%), over owning their dream home (40%).

This shift in priorities has manifested at a time when the impacts of COVID-19 and increased cost of living pressures have altered the short-term behaviours of many, forcing three in five Australians (62%) to adjust household spending and budget more. When asked if they would be able to maintain their current lifestyle over the next two years, 56% of Australians were not confident this would be possible, compared to the 44% of Australians who strongly or somewhat agreed this would be possible.

Insignia Financial Chief Executive Officer, Renato Mota, said: “It’s clear Australians have changed their priorities in life from the traditional dream of owning a home to living their dream lifestyle, which, is under pressure from the current economic climate. This Report sets some important benchmarks that helps us understand and support the aspirations and dreams of Australians for years to come.

“Australians are deeply aware of their financial wellbeing because it ultimately enables them to achieve the things that matter most to them, whether that be travel or spending time with loved ones. Financial independence means something different to everyone, and as part of our ambition to create financial wellbeing for every Australian, we want to help bring this to life.”

Australians are on their way to achieving aspirations: Insignia Financial’s Financial Freedom Index

Along with the development of the Report, the inaugural Financial Freedom Index (FFI) has been created to measure how Australians are currently positioned to live a life of financial independence and freedom, which allows them to achieve their dreams.

The FFI measures the behaviour of Australians to determine what actions they are taking to realise their dreams and financial freedom. Australians demonstrate a real desire to achieve their dreams and secure financial freedom, with an overall score of 49 out of 100 according to the FFI, however, there remains more that can and should be done to support Australians.

Comprising three elements – Foundation, Behaviour and Attitude – the FFI reveals Australians score the highest in their Attitude (59), followed by Behaviour (48) and Foundation (40).

This shows that while Australians could be better equipped in their foundational experiences such as early financial education literacy, they have strength in their attitude and sentiment, which over time, could drive a positive improvement in behaviour.

Interestingly, Gen Z (52) and Gen Y (55) receive the highest FFI scores, which is mostly driven by their strong results in Attitude, representing their positive mindset towards achieving their dreams (versus 47 Gen X, 44 Baby Boomers, 45 Builders).

Two thirds of Australians received no or a small amount of financial education in their childhood

The Foundation pillar of the FFI received the lowest score of the three index elements, indicating there is room to improve how we prepare and equip young people to achieve financial freedom. A third of Australians (31%) report receiving no financial literacy education in their childhood, with 35% receiving a small amount and only 22% receiving a fair amount.

From a young age, females are at a disadvantage when it comes to financial knowledge and the lack of adequate financial education often impacts their greater financial wellbeing later in life. Younger females are most likely to report receiving either no (20% Gen Z females, 28% Gen Y females versus 11% Gen Z males, 14% Gen Y males), or a small amount of financial education in their childhood (43% Gen Z females, 39% Gen Y females versus 28% Gen Z males, 28% Gen Y males).

55% of women are highly motivated to achieve their dreams

Despite women being at a disadvantage when it comes to financial knowledge and education, they are working hard to achieve their dreams and are more motivated than men to achieve them (55% are extremely/very motivated to achieve their dreams versus 44% of men). Younger females are being more active in planning for their futures and more likely than their male peers to have thought about their dreams.

“We know financial literacy shapes the relationship people have with money, so in order to encourage financial wellbeing, Australians need to receive practical education and guidance, especially in their youth,” Mr Mota said.

“Many Australians would have appreciated more financial education in their younger years to enable them to make more informed financial decisions and Insignia Financial are keen to contribute to reducing this education gap.”

22% of Australians unsatisfied with their financial situation and eager to improve financial literacy

Three in four Australians would like to do more with their finances, with more than one in five Australians (22%) claiming they are not at all satisfied with their financial situation, and more than half (55%) considering themselves only somewhat/slightly satisfied with the state of their finances.

In saying this, more than half (58%) of Australians want to manage their money better, with 63% of the population dedicating more focus to increasing their financial knowledge compared to 12 months ago.

McCrindle Founder and Principal, Mark McCrindle, said: “As Australians, we are known for our can-do attitude, rolling up our sleeves and chasing our ambitions head-on. This attitude is deeply ingrained in our national identity and is best exemplified in the Financial Freedom Index through the positive attitudes and proactive steps Australians are taking to achieve their dreams.

“According to the research, Australians are demonstrating this positive attitude in the pursuit of financial independence, whether that be through spending more time working to increase their financial knowledge or actively seeking the tools to help them do so.”

Helping Australian youth through financial education

In line with Insignia Financial’s ambition of creating financial wellbeing for every Australian, it will be further partnering with The Smith Family on their Money Talks program which teaches students essential money management skills. The Smith Family is one of Australia’s leading children’s education charities, supporting young Australian students experiencing disadvantage. The partnership will enable the maximum number of students, up to 500, to complete the online course over the coming school year. The program aligns with Australian Skills Quality Authority Guidelines so students are eligible for Certificate I in Basic Financial Literacy, should they wish to pursue this qualification.

“At Insignia Financial, we believe the future of financial advice will involve assisting Australians at all stages in life to help address the foundational knowledge gap. By being able to reach more people and support their financial needs, we can help to improve financial wellbeing for every Australian,” Mr Mota commented.

Key points:

• Insignia Financial’s inaugural Financial Freedom Report highlights the aspirations of modern Australia, demonstrating financial independence is the number one aspiration of 55% of Australians, followed by taking regular holidays (50%)

• According to the research, three in 10 Australians received no financial education in childhood, sparking a new wave of young people eager to improve their current financial situation and older counterparts wanting to improve their financial knowledge

• Women are working hard to achieve their dreams, with the research indicating they are more motivated (55%) than men to achieve them (44%)

• Insignia Financial’s new Financial Freedom Index score of 49 out of 100 demonstrates there is more to be done to support Australians in their ability to achieve financial independence and help them reach their dreams

• Insignia Financial is partnering with The Smith Family to help provide up to 500 students with essential money management skills, in recognition of the need for more financial education in the early years

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Renato Mota

IOOF Holdings Ltd (IOOF) Financial Results for year ending 30 June 2021 (FY21)

• Underlying net profit after tax (UNPAT) from continuing operations $147.8 million up 19% on the previous corresponding period.
• Revenues of $770m up 31% including full 12-month contribution from P&I and one month of MLC.
• Statutory net loss after tax (NPAT) from continuing operations of $143.5 million due primarily to the previously reported non-recurring costs associated with:
  • non-cash goodwill write-down due to changes in open architecture arrangements and ceasing of grandfathered revenues, and
  • the acquisition and integration costs associated with the MLC acquisition.
• Group pro forma results allowing for a 12-month contribution from MLC recorded:
  • Group pro forma revenue of $1.48 billion
  • Group pro forma UNPAT of $213 million.
• Final franked dividends of 11.5 cents per share:
  • 9.5 cents per share interim ordinary dividend, 2.0 cents per share special dividend
  • Total FY21 dividends of 23 cents per share; made up of 17.5 cents ordinary dividends and 5.5 cents per share special dividends.

Comments from IOOF Chief Executive Officer, Mr Renato Mota: “This year has been transformational with the successful completion of the MLC acquisition on 31 May. The increase in our revenue and UNPAT evidences our commitment to growth, both through transformation as well as the benefits of recent acquisitions. We realised organic growth in FY21 with $3.3bn net flows into the Evolve retail advisory platform at a time when the retail industry continues to experience outflows.

“We believe we have a substantial opportunity to improve the financial wellbeing of all Australians. We are focused on growing a profitable sustainable business model that delivers accessible and affordable advice that caters for all client life-stages. Everything we have achieved this past year is strategically aligned to that objective.

“The MLC acquisition is proceeding well and our integration plans remain on track. The combination of IOOF and MLC has created a new IOOF that has scale, diversity and growth opportunities through wide-ranging capabilities and technical expertise. We are excited about the future potential of the combined group.

“Our balance sheet remains very strong. Our senior debt gearing ratio is at 0.6 – well below our target range. This strong financial position has allowed us to maintain an attractive level of fully franked dividend payments and gives us confidence in our outlook.

“Importantly, the acquisition process did not distract us from delivering on the strategic initiatives that we had outlined as our objectives for the business. We delivered significant simplification and synergies across the group from our ANZ P&I acquisition, we restructured and repositioned our Advice businesses through our Advice 2.0 program, we achieved scale on our Evolve platform and we remain on track with the Evolve21 migration onto the new platform by the end of December. This successful migration and decommissioning represents the blueprint for further repositioning of products onto contemporary platforms and the decommissioning of legacy ANZ P&I and MLC platforms across the expanded group.”

The statutory results recorded a significant loss due to two major contributors. As previously advised, these consisted of the $200 million in non-cash goodwill write downs associated with finalisation of the BT platform arrangements, for which cash compensation was received in the first half, and the cessation of grandfathered revenues across the industry. Substantial integration and acquisition costs associated with the MLC acquisition were also incurred in line with budgeted expenditure.

P&I integration and MLC completion

IOOF significantly progressed its integration activities and delivered an additional $38 million in annual run-rate synergies by 30 June, resulting in a cumulative total of $56m p.a. with $44 million attributable to ANZ P&I and $12 million of initial synergies attributable to MLC.

Mr Mota said; “As we move forward as a single business, we will look to combine our two acquisition streams into a single integration programme. We are targeting a synergy run-rate for the FY22 financial year of $80- $100 million, representing a cumulative $136m-$156m towards our goal of $218m p.a. by FY2024.”

Advice 2.0

Mr Mota commented: “As part of our commitment to delivering a step-change in the quality and affordability of advice and constructing a sustainable long-term advice model, it was pleasing to welcome another 406 MLC advisers who have elected to join our Advice businesses.”

Key points

• Successful transformation of Bridges to a fully employed network and additional 150 advisers joining IOOF through MLC Advice.
• Advice 2.0 largely complete with 135 advisers leaving the IOOF self-employed network, and 256 additional advisers joining from MLC brands of Godfrey Pembroke and TenFifty.
• On track to FY22 break-even run-rate from ex-ANZ Advice licenses, through expense recovery and cost reduction from closure of FSP in H1 FY22.
• Servicing Independent Financial Advisers provides attractive growth prospects.
• Wealth Central, acquired in September 2020, gaining significant traction with advisers

Mr Mota, said: “We intend to operate a sustainable advice business. This means we need to continue to drive efficiencies and technology enhancements to ensure that we operate on a sound financial basis into the future.

“We remain committed to supporting advisers and their clients through unmatched technologies, choice, and life-stage strategies.

“Our Advice 2.0 model is delivering client opportunities which are highly valued by advisers partnering with IOOF to support their business needs. While we are on track with former ANZ licensees, with the inclusion of the MLC advisers we intend to break even in support of our self-employed advice model in the FY24/25 period with continued improvement in the intervening period. The addition of MLC further extends IOOF’s scale and reach.”

Evolve

Mr Mota said: “At a time when the retail industry continues to experience significant outflows, we achieved organic growth, with $3.3bn net flows delivered into advisory Evolve platforms. This is the result of market acceptance of our contemporary offering.

“We remain on track to complete the consolidation of retail accounts through our Evolve21 platform by 31 December 2021, which will allow us to retire our legacy Orion platform in FY22.”

Key points

• Evolve operating platform is now at scale, administering over $22 billion in funds.
• Evolve21 migration provides blueprint for on-going consolidation of acquired platforms.
• 3 MLC platforms administering $126 billion of funds successfully transferred to IOOF ownership.
• Smart Choice product enhancements and re-price completed, with initiatives to reposition legacy P&I products entering execution phase.
• IOOF has simplified the Cash Management Trust administration in support of better returns to clients.
• Open architecture offering, broadened through arrangements with HUB24.

Mr Mota commented: “We have already achieved scale on our contemporary Evolve platform providing a solid base to grow, and pleasingly, our net flows into our contemporary offers is positive and growing.

“We have acquired three additional platforms from MLC, taking our total number of platforms to seven. We have a proven blueprint for platform consolidation and rationalisation, as shown by our Evolve21 program which will successfully complete in December this year. “We are undertaking a complete product and platform review. This will see legacy product offerings upgraded onto new platforms. Revised pricing and product features are expected to be matched with efficiencies from operational and technology simplification.”

FY22 outlook

Mr Mota said, “Through the transformation of our business, we expect to deliver synergy benefits during FY22 and beyond. We continue to deliver on a programme that sees us build leading capabilities in our products and services and to focus on delivering better outcomes for clients, members and shareholders.”

Mr Mota added that there were clear and achievable priorities for the next financial year including:

• Completion of the Evolve21 migration and decommissioning of the Orion platform.
• Completion of the product and platform review, and progress on decommissioning additional legacy platforms.
• Substantial improvement in financial performance of the advice business by leveraging technology and capabilities across the advice business, and increasing revenue and cost efficiencies.
• Taking advantage of the expanded range and capabilities of the asset management business.
• Substantial further progress in the settlement of the remediation provisions.
• Delivery of annualised run-rate synergies of $80-$100 million.

Mr Mota concluded: “Longer-term, we continue to see significant opportunities through the expanding addressable market and changing demographics which are increasingly driving demand for our quality financial wellbeing advice, contemporary administration services and expanded investment capabilities.

“We also see opportunities for our shareholders to benefit as we consolidate our acquisitions, deliver efficiencies across the business and deliver growth in earnings and dividends.”

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Renato Mota

IOOF Holdings Ltd (IOOF) is pleased to announce the completion of the acquisition of MLC Wealth (MLC) from National Australia Bank Limited (NAB) with effect from 11:59pm on 31 May 2021.

Key points

• Establishes IOOF as the wealth management market leader in Australia.
• Doubles the size of the IOOF business to $494 billion Funds Under Management, Administration and Advice (FUMA)^[1] .
• An additional 406 MLC advisers joining IOOF, expanding the scale and reach of the advice business.
• The step-change in scale will over time lower the cost to serve more than 2.2 million IOOF clients and members.
• From May 31, 2021, a single senior leadership and management structure is in place and operational.
• As a result of the consolidation work and planning in advance of completion, IOOF expects to deliver a run-rate of between $65 million to $80 million of the estimated $150 million in cost synergies by the end of FY22.

IOOF CEO, Renato Mota, said, “This acquisition is truly transformational for IOOF as it positions us as the leader of a new era of wealth management in Australia, giving us a strong platform for future growth.

“Today we become a new IOOF. We have the strategic intent, the talent, and now the scale, to deliver our advice-led wealth management proposition to more Australians than ever before. While this acquisition delivers immediate value to our shareholders, we consider its potential for medium and long-term value even more compelling.

“IOOF and MLC share a common purpose to improve the financial wellbeing of all Australians. We also share a client-oriented philosophy and together, we will now be proudly serving over 2.2 million Australians.

“Together, we will deliver clients and members broader access to wide-ranging capabilities and technical expertise, enhanced infrastructure and a strong corporate governance framework. Importantly, this step-change in scale will over time, lower the cost of serving clients and members.

“It will also help us make financial advice more affordable and accessible for the 80% of the population who currently do not seek it out.

“While the financial services industry in Australia is transforming, the wealth management sector system growth continues to be strong, with a five-year compound annual growth of superannuation assets of 9% per annum^[2] . A bigger and better IOOF will be positioned to take advantage of these opportunities by being at the forefront of the industry transformation.”

Stronger together

The acquisition of MLC by IOOF combines two of Australia’s oldest leading wealth managers. Planning for the integration of the two organisations has been completed, which will enable IOOF to expeditiously integrate the businesses, led by IOOF’s dedicated transformation function.

Mr Mota commented, “In place from today is a single senior leadership and management structure, which is streamlined and simplified. Since the announcement of the acquisition, we have worked to identify the right talent to take the company forward. This has involved an assessment of talent and skills of MLC, IOOF, and external candidates. From day one, we now have the go-forward senior management team committed, in place and including senior leaders from MLC.”

Two new senior executive appointments to IOOF’s Executive Team were announced today. Mr. Garry Mulcahy is appointed Chief Asset Management Officer. Garry has a long and extensive career with MLC, including as EGM for Asset Management from 2009 to 2018 and more recently as Group Executive, MLC Asset Management. Garry will be responsible for overseeing IOOF’s return to active investment management. Ms. Sawsan Howard has been appointed Chief Corporate Affairs and Marketing Officer. Sawsan brings over 25 years’ experience across multiple sectors including financial services and government, most recently as General Manager, Brand & Corporate Affairs at AustralianSuper.

There will be 406 MLC financial advisers joining IOOF’s licensees on day one, representing 84% of advisers from MLC advice businesses that were in IOOF’s target set and met onboarding requirements. This is consistent with IOOF’s expectations formed during due diligence.

Mr Mota said, “It has been a priority for IOOF to ensure that those advisers joining the Group with this acquisition, as with the ANZ Wealth acquisition, are aligned with IOOF’s ClientFirst philosophy and our Advice 2.0 response to the transformation of financial advice in Australia.

“We are thrilled to welcome the very talented MLC team to the IOOF family.”

Financial reporting

Considerations:

• Transaction funding sources and uses are shown in the table below. IOOF will provide an update on leverage at its full year results presentation in August 2021.

• IOOF will incorporate MLC’s Funds under Management and Administration into its Q4 Business Update on 29 July 2021. Funds under Advice is not a metric currently reported externally by MLC.
• Internal alignment of reporting, including the re-alignment of year-end for MLC corporate entities to 30 June 2021 (currently 30 September), is in progress.
• IOOF intends to provide pro forma standalone financial results for MLC for the year ended 30 June 2021 at its full year results presentation.
• One-off pre-tax integration and transaction costs of approximately $360m are expected to be incurred over the period to end FY24.
• Further information in relation to the MLC transaction will be provided at IOOF’s Q4 Business Update and at its full year financial results.

Schedule – Key terms of Subordinated Loan Notes (SLNs)

• SLNs are unsecured subordinated debt obligations of IOOF.
• 1% per annum coupon, payable semi-annually. Step up to 4% per annum if Noteholders request redemption more than 42 months after the issue date and the Company does not redeem. • 5-year term with an early redemption start period of 42 months from Completion.
• Equity linked redemption linked to any uplift in notional securities over an initial reference price of $4.42 and subject to downward adjustments for dividends, share and security issues and other adjustments including for restructures.
• IOOF permitted to accelerate redemption after 3 years if VWAP is at least 150% of the reference price or in the case of certain tax changes. Holder permitted to accelerate redemption at any time commencing 42 months after the issue date, subject to Issuer consent, or upon change in control (acquisition by a person of beneficial ownership of 50% or more of the ordinary voting power or outstanding voting shares) or delisting or 15 trading day suspension.

———

[1] As at 31 March 2021, excludes MLC FUAdvice. Sources: (1) IOOF Q3 2021 Business Update (29 April 2021). (2) NAB Appendix 4D (released to the ASX 6 May 2021), page 74.
[2] 5-year compound annual growth of total superannuation assets to March 2021 per APRA Superannuation Statistics.

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The appointments are a part of the broader reshape of the business, allowing IOOF to be ‘fit for purpose’ both now and in the future, as the company enters a new phase of its transformation.

Key changes made are:

• Mr Frank Lombardo will assume the role of Chief Operating Officer
• Mr Darren Whereat will assume the position of Chief Advice Officer
• Mr Mark Oliver will take the new title of Chief Distribution Officer

On the changes, Mr Renato Mota, IOOF Chief Executive Officer, commented: “These promotions and changes to the Executive Team are designed to better align our teams and reflect the integration of the recent acquisition of ANZ’s Pension and Investments business (P&I). This marks the commencement of an exciting new phase of IOOF’s development.

“We are building solid foundations for IOOF’s future success. Through a purpose-led culture we continue to challenge ourselves to deliver better outcomes for clients and members. The recent increase in our size and scale through the P&I acquisition has improved our ability to invest in and deliver market leading solutions, offering more value to our clients.”

Mr Lombardo’s change in role reflects a focus on the integration of P&I as well as continued ClientFirst transformation. Mr Mota commented, “The operations function will now encompass new areas, including Transformation & Integration, a new Commercial Management capability and supporting ClientFirst thinking adoption across the IOOF enterprise.”

As Chief Advice Officer, Mr Whereat is to continue to have carriage of the Advice business, ensuring consistency and further cementing the central role advice is set to play in the company’s future strategy. Mr Mota commented that, “Mr Whereat assuming the role of Chief Advice Officer reinforces the importance of financial advice to IOOF’s strategy and in particular the transformation of advice delivery.”

Mr Oliver taking the new role of Chief Distribution Officer reinforces the increased scale and scope of IOOF’s product and client businesses following the completion of the P&I transaction as well as incorporating responsibility for Group Marketing. Mr Mota said, “Mark’s new role reflects the importance of and opportunities from the continued development of efficient and engaging solutions for advisers, investors, members and employers.”

As part of these changes, Mr Mota announced that Candice Spence, Head of Marketing, has chosen to leave the company after 14 years with the organisation. Commenting on Ms Spence’s departure, Mr Mota said, “I would like to sincerely thank Candice for her significant contribution during her time at IOOF. Candice has successfully led the marketing and communications effort for 14 years through numerous acquisitions and integrations.”

The aforementioned appointments are effective immediately.

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Renato Mota

IOOF Holdings Ltd (IOOF) welcomes the receipt of the No Objection Notices from both OnePath Custodians Pty Limited (OPC) and Australia and New Zealand Banking Group Limited (ANZ) in relation to the transfer of the ANZ Wealth Pension and Investments business (ANZ P&I) to IOOF.

Additionally, ANZ and IOOF have also agreed the following changes to the terms of the ANZ P&I acquisition:

• a purchase price of $825 million for ANZ P&I, revised down from $950 million, with the purchase price remaining subject to a completion adjustment for the net assets of ANZ P&I.
• a revised date after which either party may terminate the acquisition of ANZ P&I if there are any outstanding conditions precedent on that date. Previously that date was 17 October 2019, and the parties have agreed to extend that date to 31 December 2019, with each party having the ability to extend that date on a monthly basis up to but not later than 30 June 2020.
• changes to warranty caps associated with reduced purchase price and an amendment to the Strategic Alliance Agreement allowing for an earlier termination right by either party.

IOOF CEO Renato Mota commented “The revised terms reflect both ANZ and IOOF’s commitment to completing the transaction and it delivers greater certainty to ANZ P&I members and clients. Despite a challenging operating environment for wealth management, the strategic rationale for the transaction remains compelling and we continue to be confident in the significant benefits it will deliver.

“The transaction will meaningfully increase the scale and footprint of our core business as we continue to invest in delivery of member outcomes and execute our strategy to deliver accessible, advice-led wealth management for the benefit of all Australians.

“We have been supportive of OPC’s need to form its own view that the transfer to IOOF is in the best interests of their members and are pleased to see they have formed that opinion.”

Amendments to the Superannuation Industry (Supervision) Act 1993 (Cth) which came into force on 5 July 2019, give the Australian Prudential Regulation Authority (APRA) an approval power in respect of the acquisition of controlling stakes in Registrable Superannuation Entity (RSE) licensees.

Approval from APRA remains a requirement for the ANZ P&I transaction to complete. IOOF submitted its final application to APRA for approval on 4 October 2019.

Mr Mota said, “APRA is currently considering our final application in detail and we welcome further engagement with them on IOOF’s delivery of better member outcomes.

“SPS 5151* will be applicable to all RSEs from January 2020. Our focus on supporting positive member outcomes is underpinned by ongoing stronger governance and higher standards.

Together with our key stakeholders, IOOF is committed to restoring trust and improving the lives of our clients and their communities.”

———

*Prudential Standard SPS 515 – Strategic Planning and Member Outcomes, January 2020

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Rnato Mota

IOOF Holdings Ltd (IOOF) announced on 20 July 2018 that ANZ Wealth’s aligned advice licensees and supporting teams would join IOOF on 1 October 2018, following the early completion of IOOF’s acquisition of ANZ’s Aligned Dealer Groups business.

Renato Mota, Group General Manager of Wealth Management for IOOF, said “This expansion of our advice-led capabilities, provides us with the opportunity to execute our advice-led strategy on a new scale, with a step-change in our resources and reach.

“To support the change, we have created a new wealth management structure to support the expanded capability. The new structure is designed to maximise IOOF’s ability to support the creation of higher quality, and more efficient, advice businesses of the future; while ensuring it retains a flat, agile structure and remains close to clients.

“Key to this is the newly created role of General Manager Advice. We want someone absolutely focused on ensuring that IOOF advice business is wholly committed to clients outcomes and assisting advisers deliver these.

“I am delighted to announce that Mr Darren Whereat, currently ANZ General Manager, Aligned Licensees and Advice Standards, has been appointed to this role.

“Darren is a talented and experienced professional and a passionate advocate of advice-led wealth management. He wants every Australian to not only understand the value of good financial advice but also have the confidence to access it. This is a true fit with IOOF’s purpose.”

Mr Whereat has more than 25 years’ experience in the financial services industry, having held senior management roles across Advice, Distribution and Workplace Superannuation.

In this new role, Mr Whereat will be responsible for the advice enablement teams joining IOOF from ANZ as well as IOOF’s existing teams.

Prior to his current position at ANZ, Mr Whereat was CEO of RI Advice Group for over three years and previously held senior roles in advice businesses at BT Financial Group, Asgard and MLC.

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Rnato Mota

IOOF Holdings Limited (IOOF) has announced that it will obtain legal ownership of Australia and New Zealand Banking Group Limited’s (ANZ) Aligned Dealer Group businesses (ADGs) from 1 October ahead of schedule.

IOOF’s Group General Manager of Wealth Management, Renato Mota, said “It is pleasing to bring together the talent, experience and client first focus of our two organisations ahead of schedule.  We are creating Australia’s leading advice community – embracing diversity, a commitment to quality client outcomes and driven by passionate people.

“Having spent the past few months getting to know the advisers and the teams that support them, I am excited to be bringing together the combined talents and offerings of each organisation for the benefit of our clients.”

ANZ’s ADGs include advisers licensed under RI Advice, Millennium 3, Financial Services Partners and Elders Financial Planning.

Darren Whereat, General Manager, Aligned Licensees and Advice Standards at ANZ Wealth added “Through getting to know IOOF and their value proposition as one of Australia’s leading advice-led wealth management organisations, our advisers are excited by the opportunity presented by IOOF for both their businesses and their clients. The feedback from our advisers has been that they want to move forward as soon as possible, so I am pleased that we have been able to complete the transaction ahead of schedule.”

Mota adds “This support and endorsement has underpinned the early completion. It bodes well for the integration and reflects a tremendous opportunity for the future development and success of IOOF’s advice businesses.”

Accelerated economic completion of acquisition of ANZ’s One Path Pensions and Investments (P&I) business

Additionally, IOOF also announced that it has entered into a non-binding term sheet with ANZ for an accelerated economic completion of ANZ’s P&I business.  This would see the economic completion of this business brought forward to 1 October, with final completion taking place upon separation of the P&I products from OnePath Life.  This is expected to occur towards the end of March 2019.

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Commenting on the appointment, group general manager of Wealth Management, Renato Mota said “We’re excited to have someone the calibre of Matt joining our group, to help lead what is a transformational period for IOOF.  Having Matt’s experience in leadership and investment insights as we create a market leading position through the combination of ANZ Wealth Management and IOOF is an exciting proposition.”

Matt joins IOOF having most recently been the Chief Executive Officer of Lonsec Research which is a market leader in the provision of investment research across managed funds, structured products, ETFs, direct property and infrastructure.  Prior to Lonsec, Matt was Chief Investment Officer of a $5 billion Industry Super Fund. Matt also has extensive experience as a buy-side investment analyst responsible for stock selection and sector research on ASX and Global listed equities.

Commenting on his appointment Matt said “Joining IOOF at this point in its evolution is a great opportunity to contribute to the creation of a market leading advice-led wealth management business.  My time at Lonsec gives me a strong grounding in understanding the importance of advice and the role of advisers within it.  I’m excited by the opportunities to apply that knowledge in an organisation so committed to the advice space.”

Matt will join IOOF in late April.

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Rnato Mota

From time to time, there are finance phenomena that ignite the senses – that captures society’s imagination and interest, in a way that frankly, it probably shouldn’t. The latest phenomena one could put into this category are cryptocurrencies – and bitcoin specifically.

“Although I do not have the expertise or requisite understanding of cryptocurrencies to make a fully informed assessment of them, my background in finance and economics forces me to challenge their merit as a form of valuable exchange” says Mr Renato Mota, Group General Manager Wealth Management at IOOF.

“People from all walks of life are happy to promote cryptocurrencies as the greatest new world-changing invention. Media coverage of newly-minted bitcoin millionaires is widespread and this fuels people’s interest.  However, this is not the first time we have experienced a ‘bubble of exuberance’, and there are several lessons that can be learned from past experience.”

Saying ‘I don’t know’ to clients can be difficult

Many advisers have been asked by their clients whether they should invest in bitcoin, which is a fair question given the amount of recent media coverage devoted to cryptocurrencies.  The problem is that clients may expect advisers to be deeply knowledgeable on this latest financial innovation, when in reality very few will know a great deal about it. Nor should they.

Mr Mota commented: “An adviser’s role is not to pick the next ‘hot investment’, rather it is to guide clients to make good decisions by preparing an achievable financial plan that will help them reach their goals.”

Some good will probably emerge

Sadly, for the vast majority of bitcoin speculators, who joined the party just as it was about finished, this bubble will likely end with a financially painful pop. The main reason for this is that bitcoin is not being extensively used as a medium of exchange and has no intrinsic value other than its inbuilt scarcity. The real value of bitcoin and other cryptocurrencies are the technical and intellectual advances made by the cryptocurrency ecosystem.  These will likely become the future foundations for new and productive companies.

FOMO

The fear of missing out on windfall gains is what drives bubbles.  People like to think they are clever enough to find short cuts to wealth, but there aren’t any. Hard work, continual learning, patience and of course good financial advice are the most important components.

Mr Mota said: “When a bubble inflates, people who want to be involved rationalise what is happening and create reasons to justify why such high prices are being paid for whatever it is.”

Bubbles are very exciting

Mr Mota commented: “This is not the first time we have experienced speculative bubbles, nor will it be the last. If we look back in time we can find many examples that demonstrate how people abandon rationality in times of an investment bubble.”

Tulip mania gripped the Netherlands in the 1630s when the prices of rare varieties of tulip bulbs soared.  In 1637, a single tulip bulb of a favoured variety cost up to 4200 Dutch guilders when a ‘fat swine’ only cost 30 guilders and a skilled labourer earned 150-350 guilders per year. Tulip bulbs were scarce, luxury items and speculators used this fact to rationalise high prices. Near the end of the bubble ‘Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants, even chimney sweeps and old clothes women, dabbled in tulips’.^[1]  This classic herd behaviour is apparent in contemporary bubbles and demonstrates the persistence of irrational human behaviour in relation to investment.

What is the role of the adviser in bubble times?

Mr Mota said: “The study of behavioural finance suggests there are many primary emotional and behavioural biases that affect peoples’ ability to make or assess the validity of their investing decisions.”

Those most relevant to the cryptocurrency bubble are:

• Anchoring – relying too heavily on the first piece of information received. For example, a bitcoin was worth 4/5th of a US cent in 2010.
• Confirmation bias – interpreting new evidence as confirmation of existing beliefs. When it comes to investing, this means seeking out information that supports your existing belief and actively ignoring any evidence that is contrary.
• Herd behaviour – when individuals tend to follow the behaviour of the majority.
• Overconfidence –  a person’s confidence in their judgement or ability is higher than it objectively should be.

The voice of reason

A recent industry straw poll showed that only 1.9 per cent of advisers were ‘likely’ or ‘very likely’ to recommend cryptocurrency investments to their clients. This is good news and demonstrates that the majority of advisers are fulfilling their role of being the voice of reason.

Mr Mota further commented: “I’m pleased to say that most of the advisers I meet and engage with play a critical role in their clients’ lives.  They help them navigate the various psychological pitfalls they continually face, the latest hot investments or financial phenomena, so they can make sound decisions, avoid costly mistakes and reach their financial goals.”

To learn more about cryptocurrencies and the differences in their underlying technology, read IOOF’s Advice Research report.

The following ‘bubble card’, printed in 1720, is commenting on the bursting of the South Sea bubble^[2].  The sentiments expressed on the card apply well to most bubbles.

The headlong fools plunge into South Sea Water.
But the sly long-heads wade with caution after.
The first are drowning but the wise last.
Venture no deeper than the knees or waist.

The South Sea bubble saw shares in the UK South Sea Company rise ten-fold in 1720 before collapsing.  The bubble was driven partly by speculation over how lucrative its trading opportunities would be in South America.  The company was granted a monopoly on trade with South America by the government but this was almost worthless as Spain controlled South America.

——–

[1] Quote from: Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay, 1841.
[2] Scanned from reprint of 1841/1852 editions of “Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay.

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