Insignia Financial, an Australian financial services company, is looking to take advantage of the recent changes to Australia's pension system. With a focus on its unadvised fund members, Insignia believes it has a competitive edge in retirement planning. In order to maximize this opportunity, the company plans to spin off its self-employed financial advisers into a standalone business named Advice Services Co.

The Plan

Initially, Insignia will maintain a majority stake in Advice Services Co., with the intention of gradually reducing its ownership over time. As part of the spin-off, advisers will be given the option to take equity in the new business. Renato Mota, CEO of Insignia, emphasized the importance of partnering with advisers to enhance the growth prospects of the advice unit.

A Collaborative Approach

By sharing the growth and involving advisers in the strategy and direction of the licensee, Insignia aims to create an organization that is incentivized to thrive. This could involve providing advisers with representation on the board or advisory councils. The company believes that greater influence from advisers and alignment with their needs will lead to a more successful venture.

Encouraging Investment

To ensure the success of Advice Services Co., advisers need to have confidence in its profitability. Nigel Pittaway, a Citi analyst, explains that sustained profits are essential for attracting investments from advisers. In order for advisers to become stakeholders in the business, they must believe in its long-term viability.

Insignia's Advice Business

Currently, Insignia's advice business consists of 686 self-employed licensees who will transition to Advice Services Co., along with 242 employed advisers in its professional services advice business and 485 self-licensed advisers.

Expanding Advice Services in Superannuation

Insignia is set to expand its provision of financial advice through superannuation, as well as its employed advisers businesses, according to company spokesperson, Mota. The upcoming changes in Australia's pension fund regulations, which may allow funds to offer more financial advice, present an opportunity for Insignia to further invest in this area.

Unadvised Members: A Tremendous Opportunity

Mota highlights that Insignia currently has around one million unadvised members, indicating a significant potential for the company to do more on their behalf. The goal is to provide these members with assistance that goes beyond holistic advice, offering unique solutions tailored to their specific needs.

The Importance of the Right Conversation

While Insignia acknowledges the importance of having the right product offerings, the company places equal emphasis on fostering meaningful relationships with their clients. Mota emphasizes that the current gap lies in the ability to bring together various high-quality products in a way that best serves the clients' interests. By successfully achieving this, Insignia believes it can gain a competitive advantage in the market.

Integration of MLC Wealth

Insignia's restructuring coincides with the final stages of its plan to integrate MLC Wealth, an acquisition made by the company in 2021. This move further strengthens Insignia's position in the market and expands its capabilities in providing comprehensive financial solutions to its clients.

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