AFR Article: Friday 11 June 2021. Page 20
IOOF has overtaken AMP as Australia’s largest financial adviser but fallen short of its projected headcount by about 20 per cent.
It has lost more than 300 advisers during the nine-month due diligence for MLC and 44 since taking control of the discarded National Australia Bank wealth arm last week.
Since starting the MLC Wealth takeover in late August last year, IOOF has lost 533 financial advisers from the combined group’s financial services licences, according to Australian Securities and Investments Commission data analysed for The Australian Financial Review by researcher Wealth Data (formerly HFS Consulting).
Of those, at least 320 are believed to have left the organisation to join rivals, establish their own licence or retire from the industry, taking its total adviser headcount to 1493 at close of business on June 9.
The post-merger headcount makes IOOF the largest licensee and employer of financial advisers in the country, officially leapfrogging longstanding leader AMP, which had 1493 advisers on June 9, down from more than 3000 before the Hayne royal commission.
But it is 20 per cent smaller than the 1884 projected by IOOF in its MLC acquisition presentation to shareholders on August 31. The shortfall is expected to reduce the headline pro forma figure of $110 billion in funds under advice then trumpeted to investors.
The exits have continued in the first week since 406 former NAB-MLC advisers joined IOOF. The group has experienced a net loss of 44 advisers since May 26 – the ASIC reporting period immediately before the takeover’s completion date. Of those, 23 have resurfaced at rival groups, of which at least seven are from the MLC cohort.
IOOF head of advice Darren Whereat said there were ‘‘myriad’’ reasons why advisers had left the network over the period, including the industry-wide early retirement trend sparked by the Morrison government’s contentious mandatory education reforms.
‘‘We respect people’s decision about who they are partnering with. Some of the businesses have made that choice [to leave],’’ Mr Whereat told The Australian Financial Review.
But he said IOOF had exceeded its internal target of 80 per cent of the MLC firms it really wanted.
‘‘In terms of the overall success in the set we were targeting we got 84 per cent,’’ the executive, who joined IOOF following the $900 million acquisition of ANZ’s wealth business in 2018, said. ‘‘We’re very pleased at how the MLC community have landed within IOOF.’’
About 15 per cent of advisers who left IOOF since August last year had become customers of its IOOF Alliances consulting business under their own licences, he added. This allowed IOOF to extract revenue from these firms without being liable for the advice they provided to clients.
Some did not pass IOOF’s threshold for a ‘‘sustainable’’ firm and were not invited to join the network.
In addition, Mr Whereat said about half of the 44 who had been removed from IOOF’s licences since May 26 were transitioning to new licences within the group.
But industry sources said the departing cohort included a number of MLC firms ‘‘you would not want to lose’’, with annual revenue above $1 million.
ASX-listed CountPlus has been the most voracious acquirer, bringing in 30 advisers since September last year, of which 16 were former MLC practices and 14 were from the existing IOOF channels.
All had been brought in under the Count Financial licence acquired from Commonwealth Bank in October last year. It added another five IOOF-MLC advisers in the past fortnight, according to Wealth Data.
CountPlus chief executive Matthew Rowe said the new recruits were attracted to its comparatively ‘‘clean’’ business model.
‘‘We are not a vertically integrated business with product earnings streams that have subsidised the licensee offer,’’ he said. ‘‘Our model is centred on providing financial advice as a professional service, not distributing product.’’
But Mr Whereat said many MLC advisers were eager to join IOOF post-acquisition because of its ‘‘open architecture’’ policy, meaning they were able to freely recommend products manufactured by IOOF competitors to clients.
He also said its WealthCentral customer relationship software was a drawcard, with plans to roll the technology out to the MLC recruits over the next 12 months.