New Insignia CEO promises profit improvement

New Insignia chief executive Scott Hartley sees “a pathway to profit improvement” at the wealth giant but concedes investors will want proof of productivity and cost savings before they embrace the company again.

The former IOOF’s share price has tumbled more than 24 per cent over the past 12 months and more than 58 per cent over five years, as investors grew frustrated with attempts to reset its advice model following the Hayne royal commission.

Scott Hartley took the reins at Insignia on Friday. Arsineh Houspian

But Mr Hartley, who took over from long-time CEO Renato Mota last Friday, said he was confident Insignia’s current strategy was “logical and sensible” and he planned to stick with it.

Under that strategy, the company is integrating its Wrap and Master Trust platforms into one shared technology ecosystem and hiving off its self-employed adviser arm into a standalone business.

“That strategy is right … and there’s some big pieces of work there that are really critical to our future,” Mr Hartley said.

“Insignia has an opportunity to be a far more efficient business than it is today … [but] investors will wait for us to demonstrate that in our results before they reward us. I understand that.”

He pledged Insignia would demonstrate better profitability this year, and that its cost base would improve year-on-year for the next three to five years as it worked through this integration and simplification.

The integration of its Wrap products into a single product and fund was on track for completion in May, he said, though the same process for the Master Trust products would take longer.

Mr Hartley also pointed to Insignia’s decision to spin off its self-employed advice arm last year as a “key plank of efficiency” improvements.

Plan for super

The company retained its potentially lucrative superannuation and digital financial advice offerings as part of the move, but agreed to bankroll the new company for 12 months while it established itself.

He said the company planned to “remain a supportive shareholder” of this business under his watch, but it would work its position down to a minority holding.

The former superannuation fund CEO was also optimistic about the future of Insignia’s super arm, even as it fights to attract new, younger customers.

The popularity of industry super funds with younger workers has made it tougher for retail funds to offset payments to their generally older and retired customers with new accounts in the accumulation stage.

Insignia is the second-largest pension payer in the country, for example, which Mr Hartley said meant there was “a maturity context to the flows position” of its Master Trust.

But the new CEO said this experience with retirement-age customers could prove Insignia’s competitive edge in getting new members.

“The super fund market at the moment can be very focused on accumulation, so we think there’s a big opportunity to innovate around the purpose of super, which is retirement income,” he said.

“In doing so, that will shift the proposition, differentiate our super fund offering, and be more compelling to consumers … and then we’ll be able to attract more members and grow the Master Trusts.”

But that comes as industry super funds push the government to establish “funds for life” by merging accumulation and retirement products, which means customers would not need to actively engage with their super to retire.

Mr Hartley joined Insignia from AMP, where he led its wealth management arm under group CEO Alexis George from 2021 until departing the business amid a restructure last May. He was also Sunsuper’s CEO from 2014 to 2019, when it merged with QSuper.