Insignia announces new advice services partnership model

In its fourth quarter business update, Insignia Financial said it intends to reset its financial advice operating model to “competitively leverage opportunities for sustainable growth”.

The firm said that while this new business does not have a brand name locked in, it is being developed under the working name of Advice Services Co, or ASC. It will work as a new partnership ownership model for its self-employed licensees, which comprises RI Advice Group (RI), Consultum Financial Advisers (Consultum), and TenFifty.

“ASC represents the ambition to create Australia’s largest adviser-owned licensee group, positioning it to capitalise on the dynamic self-employed advice market with the support of Insignia Financial,” Insignia said.

“ASC will operate with independent management, oversight and governance, with input from both Insignia Financial as well as key advice practice representatives.”

The firm said that while Insignia will hold a majority stake in ASC at the outset, this will reduce over time as advisers are invited to receive equity in ASC.

“Insignia Financial’s continued shareholding will ensure alignment and commitment to the self-employed advice model through an ongoing partnership,” Insignia said.

“ASC will have a strong mandate to grow the number of advice practices and advisers operating under its licences.”

Commenting on the new partnership, Insignia Financial chief executive Renato Mota said: “This is a transformational initiative for our advice offering and will accelerate the return to profitability of our advice business, while ensuring our advice services model is positioned for growth as the financial advice industry continues to evolve.

“ASC will be owned and run for advisers, with the backing and support of Insignia Financial. The formation of ASC creates an adviser-focused licensee that can innovate in support of an emerging high-quality, self-employed profession.

“It also provides Insignia Financial with greater opportunity to focus on the growth of its Professional Services Advice businesses, Shadforth Financial Group, and Bridges Financial Services, expanding the scope of advice through superannuation, and the development of new technology-enabled advice delivery to leverage future opportunities presented by the government’s response to the Quality of Advice Review.

“The greater focus and specialisation of both organisations will lead to better outcomes for clients, making advice more accessible to more Australians.”

Insignia added that it would contribute staff, resources, and working capital to ASC and continue to support the new business under a transitional services agreement for 12 months from completion, which is expected to occur in the coming months. It will also provide a capped indemnity to the new entity for any historical remediation relating to conduct under Insignia Financial’s ownership.

ASC will be headed by CEO Darren Whereat, who is currently the chief advice officer at Insignia Financial.

The announcement comes less than a week after Insignia entered into an agreement to offload its $1.1 billion friendly society investment bond business through the divestment of IOOF to Australian Unity.

The deal will see Insignia paid a total consideration of up to $40 million, including $36 million in cash upon completion as well as an additional amount of up to $4 million payable in 12 months following completion subject to the transition of clients and funds under management.