Not the swansong Insignia’s Mota would have wanted

ANALYSIS

One of the most important data points in the Insignia Financial half-year results was that its advice business is now within $700,000 of break-even.

As half-year results announcements go, it was not the sort of swansong that out-going chief executive, Renato Mota, would have wanted with the company reporting a loss of $49.9 million and the level of unfinished business notwithstanding the progress which has been made in integrating the MLC and ANZ acquisitions.

Looming losses are never comfortable prospects for the boards of publicly-listed companies and undoubtedly played a part in Mota’s decision-making last year.

However, for Insignia’s new chief executive, Scott Hartley, the Insignia half-year result also points to the opportunities which are being presented to put his own stamp on the work of his predecessor and drive the company back into the black.

The impending arrival of Hartley at the helm may explain in large part why Insignia’s share price spiked yesterday from $2.26 at the open to close at $2.55.

Bedding down major acquisitions is never easy and, for Insignia, the MLC and ANZ businesses were always represented a major challenge for Mota who had found himself at the helm after the somewhat messy post-Royal Commission exit of his predecessor, Christopher Kelaher.

The ANZ Pensions and Investments business was acquired in 2020 and MLC was acquired in 2021 meaning that the bedding down process coincided in large measure through the early throes of the COVID-19 pandemic and the implementation phases of the Royal Commission recommendations.

Hardly surprising, then, that Mota found an already challenging task had been made even more formidable.

While there was a frisson of attention around the confirmation of Insignia parting ways with Godfrey Pembroke, the circumstances of that exit had been well-known since August, last year, when a tie-up was signalled by Clime Investment Management.

WealthData’s Colin Williams yesterday suggested that with its acquisition of Diverger, Count Limited might now supplant Insignia as the second-largest financial planning provider.

That news will probably not bother Hartley who believes that there is a balance to be found in terms of quality within scale.

Rhombus Advisory – the new partnership model for self-employed licensees comprising RI Advice, Consultum Financial Advisers and TenFifty is indicative of the direction in which Insignia wants to head to achieve advice profitability.

With just $700,000 to go to break-even that seems entirely possible to announce when Insignia delivers its full-year result.