Financial Planning
IOOF continues organic growth trajectory

IOOF is celebrating record financial results, driven largely by its financial advice and platforms businesses and the execution of multiple acquisitions as recent as June.

IOOF reported a record underlying profit after tax of $191.4 million for FY18; an increase of 13% on the prior corresponding period.

Profits for the advice business were up 2% at $78 million, and IOOF managing director Chris Kelaher said it had been a good year for organic growth.

"I think it's a confirmation for us of the advice-led strategy and the open architecture through which we run our business. We offer choice across a number of different platforms and each of these have been performing very strongly during the period," he said.

IOOF platforms saw net inflows of $1.6 billion over the year, with profits rising by 5% to $81 million. Cost reductions of $6.4 million and the launch of managed discretionary accounts on IOOF Pursuit were key contributors to this outcome, Kelaher said.

"This is particularly pleasing for the management team, first and foremost because for many years the company has been regarded as fundamentally an M&A example and I think this is now starting to demonstrate that our ability to generate organic flow is now superseding the contribution from the M&A activity," he said.

Kelaher also cited greater investment in internal IT systems and talent as a driver of success in the platforms space.

In terms of investment management, UNPAT rose 12% to $36.7 million.

"Most importantly, from our perspective, our MySuper product is really going to become the key comparator product or fund that we'll use to compare against other providers in the industry, whether they be industry funds or otherwise," Kelaher said.

IOOF's trustee services division recorded $9 million in profit; this was up 34% year on year. While this is relatively modest in the context of the whole group, Kelaher said it has been a particularly personal challenge of his to see this grow.

"It fits strongly in terms of our vertically integrated model and is a reflection of the successful acquisition strategy that we've been implementing," he said.

He added it is largely due to the successful completion of the National Australia Trustees acquisition.

IOOF also publicised the recent acquisition of Ability One WA/SA (A1WA), a provider of financial advice and life planning to clients who have suffered serious injury in Western Australia and South Australia.

Purchased in June, IOOF chief financial officer David Coulter described Ability One as a highly complementary business. All A1WA staff joined the Australian Executor Trustees business in Perth in early July.

"The transaction cements a long-standing and trusted relationship between the two organisations, with Australian Executor Trustees (AET) the appointed trustee for the majority of A1WA's advisory clients... Jon Morris, managing director and majority shareholder of A1WA, will remain with the business for an initial period of 12 months to ensure a smooth transition for clients and staff," IOOF told staff at the time.

Combined, the acquisitions see IOOF's Australian Executor Trustees become the largest compensation trust provider in the nation.

Kelaher added that the addition of ANZ Wealth's pension and investments business will add to this in future and flagged further M&A activity to come, saying: "There's certainly more to come in this space but we are pleased with the positive momentum being generated."

Read more: IOOFAustralian Executor TrusteesAbility OneChris KelaherANZ WealthDavid CoulterJon MorrisMySuperNational Australia Trustees
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