Ann: Investor presentation - IOOF FY 2018 results, page-90

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JCoure

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15/08/18

12:49

Post #: 34951446
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Originally posted by rcs1359 ↑

I cannot say what the recommendations will be from the RC, but you would have to think that the amount of regulation of super fund trustee service providers will have to be increased, with greater emphasis on ensuring that the primary obligation is to the best interests of the fund beneficiaries not shareholders. That is a pretty fundamental requirement of the fiduciary duties owed by a trustee. One would assume that will have some impact on profitability.

I don't know how you eliminate these problems when the law allows trustee services to be provided by publicly listed companies whose primary focus is profit for shareholders. That, to my mind, is an anathema to the basic and fundamental nature of the trustee/ beneficiary fiduciary relationship. It is why I have always avoided IOOF and AMP, which are enterprises that I think should operate as member owned mutual funds, rather than shareholder owned profit centres. Talking about acceptable rates of return is not something that sits easily with trusteeship and acting in the best interests of beneficiaries.

The dream run is that the whole superannuation industry has yet to be properly put under the microscope and required to properly face the legal reality that they are trustees first and foremost. This I think is going to become a building political issue over time and substantial industry structural changes will be imposed which will not be to the benefit of shareholders in these types of businesses. When that happens depends more on political will than anything else.

I think IOOF seems to have serious cultural issues when one considers what has come out at the RC. The CEO had a surly arrogant attitude to questioning as if he thought it was all a waste of time. They put forward an earlier witness who didn't even know why he was put up as a witness. They used trust funds, not company funds, to pay compensation to beneficiaries. They have been repeatedly taken to task by APRA over placing shareholders interests ahead of beneficiaries interests. The put up an impossible to read hand written scrawl as a set of board minutes. To me that was enough to stay away.

Having said all that, you may well make money in the short term buying IFL given the low price it has fallen to. For me, however, there are plenty of other businesses that have every legal right to seek maximum profit for their shareholders from their activities that make them a better long term bet as an investor.

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IFL appears to have the same issues as AMP and Suncorp. All three have had their SP trounced.

Whereas the larger banks appear to be unscathed as their SPs have all gone up with the exception of CBA if you see ANZ, NAB and WBC.

AMP, SUN and IFL look vulnerable and appear to have had a SP slug on the basis of what has happened at the Royal Commission.

IFL Price at posting: $8.67 Sentiment: Sell Disclosure: Not Held
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