IOOF issued its third-quarter update on Thursday, reporting it ended March with $203.9 billion in funds under management, advice and administration (FUMA), an increase of $1.5 billion year-on-year.
The group overall copped $2.4 billion in net outflows during the three-month period, but it was buoyed by a $5.4 billion rise in funds from favourable market conditions.
In advice, IOOF had copped $1.4 billion in net outflows, leaving it with a total of $64.7 billion in funds under advice and distribution. A year prior, the total had been $65.2 billion.
The exit of 53 advisers from IOOF’s self-employed advice businesses, under its advice transformation strategy, had caused $2.1 billion to flow out of the business.
As flagged in its half-year results, the group expects around 140 advisers will depart the business, as it moves to improve the quality and sustainability of its self-employed model.
During the March quarter, 14 new advisers, with $1 billion in funds under advice, also transitioned to IOOF.
Regardless, IOOF has reported the financial impact of the total advice outflows is “not material”.
IOOF chief executive Renato Mota commented the company is continuing along on its transformative agenda, culling advice practices it believes will not be “economically sustainable” under its future model.
“In financial advice, we are transforming towards a sustainable long-term advice model. Our focus is on sustainability, accessibility and affordability, with technology as the enabler of this strategy,” Mr Mota said.
“We flagged in February this year an expected reduction in adviser numbers and during the quarter, we rationalised arrangements with practices that were considered unsustainable. This, together with the one-off $0.5 billion outflows due to the AET cash product simplification, has impacted flows during the quarter.”
In investment management, IOOF saw $507 million in net outflows, including $469 million transferred out of the AET Cash Deposit Fund while IOOF simplifies its operating model. The funds have been reinvested into external cash accounts.
The investment segment was left with $22.1 billion in funds under management, an increase from its total of $21.8 billion the year before.
Excluding the one-off AET withdrawals, outflows for investment management totalled $38 million.
Meanwhile the Pensions & Investments (P&I) business acquired from ANZ saw $782 million in net outflows. It ended March with $70.9 billion in funds under management, compared to its $70.4 billion total the year before.
The portfolio and estate administration segment on the other hand gained $267 million in net inflows, leaving it with $46 billion in funds under administration.
The total number of accounts administered with IOOF’s Essential, eXpand and SPS managed account products more than doubled year-on-year, with the number of advice licensees signing also surging, from 18 in March 2020 to 84 this past quarter.
IOOF has also said it is on track to complete the MLC acquisition by 30 June, subject to APRA approval.
“MLC will deliver a step change in our scale and reach and will provide substantial benefits to our clients, members and ultimately our shareholders,” Mr Mota said.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
