Insignia drills down into Q3 adviser losses

There were 1,483 advisers in the Insignia Financial network as of 31 March 2023, a reduction of 42 advisers compared to the previous quarter, which the firm said largely reflected changes in the industry.

In a quarterly business update issued on Wednesday, Insignia indicated that it was creating a further distinction between employed and self-licensed advisers by changing the naming conventions used to describe its advice channels to Professional Services (employed) and Advice Services (self-employed and self-licensed).

The move is expected to “improve understanding of the differences between the channels”.

The Professional Services channel, which includes Shadforth Financial Group (SFG) and Bridges and operates as a business-to-consumer model, employing advisers to provide advice directly to clients on a fee-for-service basis, saw a reduction to 242 advisers in the third quarter from 247 advisers in the second quarter.

“The integration of MLC Advice into Bridges and subsequent reshaping of the service proposition has seen a reduction in adviser numbers following alignment of resourcing models,” the firm said.

“This is expected to result in a short-term revenue reduction as low fee-paying clients are moved off fixed term service agreements.”

Meanwhile, the Advice Services model, which provides business-to-business “advice as a service” to self-employed advisers operating under an Insignia Financial group AFSL, and to self-licensed advisers operating under their own licence, recorded a reduction of 37 advisers to 1,241 advisers in 3Q23.

“The losses in the advice business have been largely seen within the Advice Services channel,” Insignia noted.

The firm reported that its funds under advice and administration (FUMA) increased by $6.2 billion or 2.2 per cent to $291.3 billion during the third quarter.

“Growth in FUMA during the quarter reflects execution of our business strategy and stabilisation of investment markets,” commented Insignia chief executive officer Renato Mota.

“We have achieved net inflows of $604 million on a continuing basis so far this financial year. This further highlights the benefits of our diversified business model, with positive flows in Workplace, retail asset management and institutional asset management offsetting net outflows from advised platforms, which have been impacted by market volatility and industry weakness. Our Workplace offering is continuing to attract strong inflows from previous business wins, while asset management has attracted strong institutional inflows.”

Insignia had $205.5 billion in funds under administration (FUA), an increase of $4.2 billion, while funds under management grew by $2 billion to $85.8 billion.

The firm said that it remained committed to achieving break-even in its Advice Services channel and delivering overall profitability in its advice business.

“As we look to the remainder of 2023, our experience and track record in disciplined execution of strategic initiatives and opportunities gives us the confidence that we will continue to deliver benefits to members as well as shareholders in the face of uncertain investment market conditions,” Mr Mota concluded.

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.