Insignia updates on its advice partnership model

30 October 2023
| By Rhea Nath |
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Following the announcement of a proposed Advice Services Co (ASC) at the beginning of the quarter, Insignia Financial has offered further updates about this new partnership model for its self-employed licensees. 

In July, the firm announced its intention to reset its financial advice operating model through a strong mandate to grow advice practices and advisers operating under its licences. 

ASC has been proposed as a partnership ownership model for self-employed licensees comprising RI Advice Group, Consultum Financial Advisers and TenFifty.

The proposed model continues to generate a high level of interest and enthusiasm from advisers, Insignia said.

“The leadership team structure for the new entity has been confirmed with recruitment for vacant roles to commence shortly,” it said.

Further details on the equity options, business plans and a new name are now expected in the next few months.

“The leadership team structure, equity options, future of the advisory boards and business plans will be announced at adviser roadshows to be held at the end of year, along with the new name for the business,” Insignia explained. 

It was previously announced the model would be headed up by current Insignia chief advice officer, Darren Whereat, as chief executive. Whereat was previously the chief executive of RI Advice Group from 2013 to 2016. 

Insignia said it will initially hold a majority stake in the model which will reduce over time as advisers receive equity in ASC. It will contribute staff, resources and working capital, and continue to support the ASC business under a transitional services agreement for 12 months from completion.

It expected ASC to be profitable after the initial 12-month establishment period and added it will provide a capped indemnity to the new entity for any historical remediation relating to conduct under Insignia Financial’s ownership.

As at 30 September 2023, there were 1,385 financial advisers in the Insignia Financial network. This comprised 219 advisers in the professional services (employed) channel and 1,166 advisers across advice services channels (self-employed and self-licensed). 

This was down from 1,413 in the previous quarter.

During the quarter, Insignia saw the departure of 23 advisers within their professional services channel “as a result of rightsizing of adviser numbers within Bridges”, it said.

The reduction in the adviser services channel of two self-employed (licensed) advisers and three self-licensed advisers largely reflects the discontinuation of the Lonsdale licence, with seven practices (representing 19 authorised representatives) joining Consultum from Lonsdale, Insignia added. 

According to Adviser Ratings, the co-equity or partnership model, as being offered by Insignia, “has demonstrated a potent capacity to drive business expansion in advice practices, providing a mutually beneficial partnership between licensees who have scalable access to technology, compliance and backend processes and advice firms”.

With this in mind, the firm previously speculated if it could also be an attractive option for AMP, and estimated one in three AMP and Insignia practices could be attractive for this as they have profit margins over 10 per cent and revenue over $1 million. 

“The prospect of selectively choosing top-tier advice practices, particularly those they already have familiarity with, could offer AMP an advantageous edge in terms of visibility and comprehension of their licensed operations,” Adviser Ratings said.

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