All eyes will be on IOOF over the next year or two as it digests the acquisition of MLC and beds it down alongside other recent acquisitions, including the former advice businesses of ANZ.
In September, CoreData named IOOF head of advice Darren Whereat winner of the 2020 Industry Leadership Award. It was an award partly in recognition of work already done to transform IOOF’s existing advice networks. But it was also made with one eye firmly on the future.
As the leader of IOOF’s advice businesses Whereat will face significant scrutiny and pressure to demonstrate leadership in the advice industry – specifically, to show by example that financial advice can be delivered at scale, in the best interests of clients, free from conflicts and subsidies, and in a profitable and sustainable way.
“We do not have a different story for those that are with us,
or those that are coming to join us. The story is the same.”Darren Whereat, IOOF
It will be a test of leadership to ensure incoming advisers from MLC understand the IOOF plan and what’s being offered to them while ensuring IOOF’s existing salaried and self-employer advisers remain confident the organisation hasn’t taken its eye off the ball in pursuit of greater scale.
“We won’t take our eye off what’s made us successful,” Whereat says.
“There’s an opportunity for some very good high-quality advice businesses to come and join us, and we’re very excited about that, but we’re not doing it at the expense of any work we’re doing with our existing group of advisers. We do not have a different story for those that are with us, or those that are coming to join us. The story is the same.”
Whereat says effective leadership starts with an ability to communicate and an ability to relate to those being led, and to be true to yourself and to others.
“It’s making sure you’re surrounded by great people, but you do need to be able to communicate exceptionally well,” he says.
Standing out from the crowd
Whereat says individuals he regards as good leaders are authentic, possess an ability to make bold decisions and a willingness to stand out from the crowd by making choices that may not be popular but may be necessary in pursuit of a clearly defined goal. Leadership can sometimes be a lonely place, but it comes with the territory.
“Sometimes it can seem lonely because you can be out there on your own for a period of time, until you help others understand why you’ve got a particular view and your vision for the future,” he says.
“But then it comes down to your ability to influence, and your ability to engage. There’s no use leading and you being the only one there. If you want to change something you’ve got to chart a course and then get others to want to join you.”
“It comes down to your ability to influence, and your ability to engage.
There’s no use leading and you being the only one there.”Darren Whereat, IOOF
Whereat says people employed in the advice industry, and people who’ve received financial advice, know that the benefits of advice are not just financial, and include a range of non-financial benefits such as better mental health, less stress and worry and better personal relationships.
“My view is that if we can get the public [broader community] to engage with advice, not just the one in five that are engaging with us, then the entire population will be better off,” Whereat says.
“It’s not going to make millionaires out of everybody, but it will help everybody make the most of what they’ve got. If you think of us as a profession, a profession is for the betterment of the community.”
Challenges for advisers and licensees alike
Whereat says IOOF’s task is to respond to the challenges for advisers and licensees alike presented by the evolution of financial advice from industry to profession.
“We looked at the way we were preparing advice and we thought there’s a way to transform the advice segment if we focus on three core elements: client engagement; efficiency for the adviser; and AFSL sustainability,” he says.
“It’s not one over the other, either; we have to solve for the three of these otherwise we will not be successful.”
IOOF’s program to achieve that, dubbed Advice 2.0, was underway well before the MLC transaction come into view, and it won’t be changed by the acquisition.
“And now we will also have the scale that the MLC transaction affords us,” he says.
“They are applicable across all AFSLs/Licensees. They’re not just an IOOF blueprint.
I am sure there are many businesses that have a version of this.”Darren Whereat, IOOF
“But if you look at those three things – client engagement, adviser efficiency and AFSL sustainability – whether you’re in a big institution or you’re in a mid-tier [licensee], they are applicable across all AFSLs/Licensees. They’re not just an IOOF blueprint. I am sure there are many businesses that have a version of this.”
Whereat says IOOF’s advice-led wealth management vision encompasses employed advisers, self-employed advisers and services for advisers with their own AFSLs.
“It’s not one over the other,” he says.
“I do not favour one over the other. If you want to be advice-led you have to be successful in each of these three fields. [To achieve] scale, in terms of the way you go about doing things, in terms of governance, technology and so on, you need representation in each of these spaces. Success for us then looks like these three advice models operating harmoniously, for the benefit of the communities.”
Whereat says a multi-brand strategy in the self-employed adviser space will continue as long as they have a clearly distinct value proposition.
“We’ll continue to check our thinking on that,” he says. “I’m comfortable with multi brands but only so long as we have a single supervision and monitoring process. You can’t run multi-brand multi-process cost effectively.”
Advocating for advisers
Whereat says an advice-led strategy also involves advocating for advisers.
“Our role in that is understanding advice, making sure we continue to invest in our offers to help them continue to evolve and remain contemporary and understand what clients want, and build solutions for that,” he says.
“The way the broader industry has been fracturing, I think there’s space for a genuine leader in the industry, for an organisation to lead. And that leadership should be around the voice of the adviser.”
Whereat acknowledges there’s a high level of responsibility that comes with taking an advice-led leadership position, which includes clearly demonstrating that IOOF’s vision for advice isn’t a back-to-the-future position where the ills of the past, related to subsidisation and conflicts of interest, are simply revisited in a different form.
“Leaders of AFSLs – and I include the mid-tiers and everybody in that – have been moving to a sustainable position,” Whereat says.
“Equally, the AFSL needs to look at itself and say are my resources and
my technology and the way I do things optimal for the services I’m providing?””Darren Whereat, IOOF
“Everybody is saying it’s no longer OK to operate on subsidies, or subsidisation within [the licensee]. The industry has been on that journey. For us the destination to achieving that is much closer than people realise. With grandfathering ceasing at the end of this year, you are either sustainable from the early part of next year or you need to do something with your cost base, and I think most people have been looking at that.”
He says there are two aspects to sustainability: the fees licensees charge advisers to cover the cost of services, and the cost of those services. But he says IOOF does not expect advisers to carry the can alone. He says it is clear advisers need to pay more for the services they get from licenses, which represents a break from the past.
“But equally, the AFSL needs to look at itself and say are my resources and my technology and the way I do things optimal for the services I’m providing?” Whereat says.
“I think there’s a dual responsibility there.”
Whereat says a significant investment in technology will help reduce costs and improve efficiency by streamlining how Statements of Advice are prepared and how annual reviews are undertaken, to name just two points.
“We’re not a robo-advice shop,” he says. “For us, it’s a combination of the technology and the adviser that will deliver trusted advice in a more efficient way.”
Significant investment to support advice
Whereat says a shared goal of all players in the advice profession must be to work to make sure as many Australians as possible are able to access and enjoy the benefits of advice.
“We are one great industry, but we love an internal stoush and taking pot-shots at each other,” he says.
“If you want to be a profession you’ve got to be a collective. Our view is: just get advice. If people are better off getting advice, and if they get that advice from their super fund, from a self-licensed [adviser], from an institutionally owned or a mid-tier [licensee], if they’re going to get advice, that’s the first step. That’s the betterment, that’s the community responsibility. And that’s the leadership piece.”
