I expect IOOF to continue to trade at a P/E lower than the overall market simply due to the expectation they will struggle to grow organically, possibly continue to suffer from earnings contracting for some time. They are better than AMP though.
Frankly, financial planning dealergroups are continually making less and less money. Financial planners are continually making less money and leaving the industry in droves. Less advisers, less money. Shelf space fees are almost eradicated (dealer groups charging product providers to be on theIr APL). The gravy train is over and none of this paints a rosey picture for IOOF and it's why the banks all pillaged the industry then sold up.
My personal opinion is that margins in being a dealergroup are about to become obsolete once grandfathered remuneration is ceased and the education requirements drive many advisers out the industry. From a platform perspective, there are already a variety of cheaper and superior options. If vertical integration also goes in the RC (being able to have your own advisers flog your own product), I don't see who would actually recommend anything from IOOF.
It's a bold statement, I agree. I am happy to be wrong. However, it's a simple as there being a whole lot less money in the FP industry from here. The companies and advisers in the space have been making far more money than competency or value add they provide. The old salesman flogging product or just buying books of clients are largely uneducated and nothing but salesman. The financial planning market will move towards legal independence (advisers not being allowed to receive any commission or conflicted benefit) and having to invoice one-off for every bit of work. This is how most professions work but most advisers right now couldn't justify the value to clients charging huge fees on an ongoing ADHOC basis to rollover someone's super and never look at it again. This is the clear way to fix the Industry but not anywhere near as lucrative so everyone but less than 100 advisers in Australia are not legally Independent.
I know so many advisers with 1,000+ clients currently. You can't realistically service more than 200 clients as an adviser. All these clients not currently being serviced, some will be retained, but the others will just go it alone, contracting the Industry. It's a shame as good financial planning adds huge value to the right client, but too many have taken the Mickey for years.
IFL Price at posting:
$6.84 Sentiment: None Disclosure: Not Held
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