I thought this was a pretty good post by @Bodhi_Trader back on the 12/06/2016 and a good, long, detailed summary of Intiger IAM (SRT) Hope you don't mind me re-posting Bodhi
This post will be lengthy one due a structured download of my insights based on following this company and reading every single message on the IAM/SRT forum for the last 6 months.
For disclosure, I am a holder like many of you in the range of 1m+ heads (but less than TheArchitect/MF/MW).
Furthermore, my comments are based on working in the Financial Planning industry, managing paraplanning teams for the Big 4 banks, plus other large dealer groups over the past 10-15 years. I now consult to the Wealth Management Industry. My previous profile name which I have changed was @lriboldi
Specifically, my experience has been not to distant from what MF has set out to achieve. In fact, the main catalyst for this post is to share the view that offshoring and outsourcing administration and operational functions does work and can achieve significant cost savings. Offshoring SOAs has already been done in Australia (as I did in my previous role for one of the Big 4 banks). To my understanding, since having left that Bank, this process continues today and requires a team to be that bridge between the Sydney onshore Paraplanners and Compliance teams and the offshore team (external company that specialises in outsourcing tasks). I'll cover this in more detail below.
Standing on the shoulders of giants Having read all of the posts on this forum for a while, it goes without saying that contributions from everyone have been both informative and entertaining. Thank you to @TheArchitect (they either love you or hate you, but they all respect you...especially following your new found level of transparency last week), @SeeThru (the eyeball pic still freaks me out), @TraderGT, @Vanzant,@Zandaya (bring back the baby photo), @forrestfield (for helping us to see the trees too),@TheGladiator (aka Russell Crowe), @Glyco, @Davy Boy, @d_l_b, and more recently@BohannonsVest (quick witted and always a laugh). I've also observed a number of bakcgrounds on this forum both near and far to the industry such as accountants, financial planners, investors etc. This adds diversity to the discussion and forum which one simply cannot get by sticking to the same crowd.
SOA Pricing and Costs A big topic, so I'll try to summarise this up as much as possible. 40% savings are the goal...Whilst working in Paraplanning for the banks, it cost (i.e. labour, time/effort, overheads) us roughly $400-$500 to produce a SOA before we offshored the work. These are averages, so the easy SOAs cost $300, the harder ones cost $600+. With offshoring "part" of this work, the easy SOAs were offshored only and reduced the cost from $300 to around $100. The complex SOAs were kept in Australia by Paraplannners. This is a 66% reduction and the cost of $100 is still significantly higher than what IAM are quoting of $19. In short, the financials work, it can be done, but execution is key. 40% contractual savings is challenging for a business starting out, but definitely achievable as are M1-M4.
Execution and Lean Six Sigma I remain bullish on Mark Fishers capability. Offshoring is complex, but is made easier if you have a process and Lean Six Sigma capability (which I also have). For those that aren't aware, best to Google Lean Six Sigma. GE is a leader in this field and based on his experience, this clearly says that Mark not only gained this from his experience there, but has applied this to various other business, including IAM.
Offshoring/Outsourcing For as long as there are 190+ countries, 7+ billion population and geographical spread, there will always be labour arbitrage and comparative advantage. Over time Philipinnes and other nations will get more expensive (as they did with the business unit I ran), but it's all relative...in this case to Australia. Specifically, the labour arbitrage between India, China, Philippines Vs Australia is roughly 2-3:1. i.e. 2 or 3 times as much man power compared to Australia. In dollar terms, I think the rough salary for low level office workers (but skilled) in many of these countries would be $20/30k pa max for 1 worker. So to get 3 workers would be around $70k AUD, which is the rough cost of a paraplanner these days (ranges from $50k to 100k in Sydney depending on experience). I am also surprised that IAM's offshore team is RG146 compliant. Generally, these tasks are admin and data entry related and knowing the subject matter of what is being worked on makes no difference. Therefore, I have additional confidence in IAM if the staff are RG146 trained and therefore can add value to the process by understanding the subject and context of the work as this makes things even more efficient.
IAM Clients - IFA vs Dealer Groups IFA (Independent Financial Advisers) - these are planners that run their own firm, have their own AFSL and act independently of the big into's. They may still outsource or partner for functions, but they are not paid a salary like bank branch financial planners. It seems that this is what IAM is targeting first based on some of the comments made post meeting on Friday. I think this makes sense for now. Dealer Group (DG) - this has been covered extensively in this form (i.e. AMPs, Charter, etc). The difficulty with chasing these clients is they are bigger beasts, more complex, highly political and usually already in bed with someone else. E.g. CBA with IRESS, Macquarie's former of ownership of COIN etc).
The Management Nothing more to add here. Brilliant and couldn't be happier. I have seen Mark R present at many conferences and is a genuine and professional businessman. This team will see their client base starting with IFAs and moving into DG based on their relationships with AMP and MLC. CBA/WBC/ANZ will be harder, but there are plenty of other large groups out there (PIS/Centrepoint, Perpetual, Genesys etc)
FinTech and Robo We are all clear on the differences now, which was a mission when all this news was announced. To add, FinTech and Robo are complementary services. Robo will increase the size of the overall financial planning pie (engaging clients, new channels etc). FinTech will change how the pie is made (slow cooked to on demand).
Regulation Based on reports following the meeting, there was mention that Patrick highlighted the importance and over burdening power of regulation of the FP industry. This is true (since FSR and FOFA/Best Interest) but perhaps presents the best opportunity for IAM. The more complex and expensive it is for planners to run their practice, the more they will be leaning towards back/middle office administration functions to be steamlined or outsourced. The downside risk here is if the regulations start getting too complex on the "grandfathering" side of rules, this makes technology and systems more expensive to update and maintain, which means IT development costs go up, but still cheaper than pen and paper.
The Technology Unfortunately, KLIP and LILLY are still black holes to many of us, including myself. I have never come across their technology during my time (mostly spent on COIN, XPLAN). Someone mentioned in a previous post "SAAS". I wasn't sure if they meant SAAS (Software as a Service) or SAS (the technology company). Can you clarify?
Overall Comments I remain very optimistic of IAM because I understand their business model, what they are trying to achieve, the need for it in the industry and the process/method/approach they are taking with the right people involved is working in their favour.
If anyone has any questions specific to the industry, please post and I will attempt to answer without breaching any privacy lines.
Thanks everyone for your contributions. I hope to continue posting in future (shorter ones, but quality over quantity). Enjoy the long weekend.
AIMHO and DYOR.
Bodhi_Trader.
IAM Price at posting:
3.2¢ Sentiment: Buy Disclosure: Held
(20min delay)