Adviser numbers volatile as transaction beds-in
More news from the IOOF bunker this morning as reports are indicating further departures of financial advisers from the recently acquired MLC. Since the deal’s announcement, approximately 390 advisers have left the group, bringing numbers to just under 1500 retained.
Market observers expressed concern that a business that targets itself as an “advice first” business could lose 20 per cent of its client face staff. Furthermore, confidence and continuity is everything in wealth advisory, meaning volatile coverage of investors can easily throttle existing income streams. However, IOOF had initially targeted a retention rate of 80%, so management is saying the current outflow is within their plans.
The short-term spin is the outflow will probably be positive as lower staff numbers should act as a cost-savings measure. However, some analysts are openly musing whether management has a master plan to let underperforming advisors leave rather than execute a formal programme of redundancies and buy-outs.
Doomsayers argue that the eventual impact will be negative as business moves with departing advisors and changes to the product mix.
Business insiders are wondering how IOOF can transform its business and bring the two divisions together in harmony. Marketing specialists contacted by Which-50 suggested that they’ll need to spend on several levels to calm the transition. One specialist said, “They need to get their message out to staff and clients. Staff engagement and corporate culture are going to be the key. If IOOF gets this wrong, it’s value destruction.”
The broader financial community sees IOOF as vertically integrated, with more than three-quarters of its earnings coming from product platforms and funds. However, financial advisers do not always prize integration as they see it as restricting their ability to pick and choose best in class products. Many Private Banks have had to put limits on internal product sourcing and pricing to demonstrate their commitment to client needs first and their institutional owners second.