IOOF chief executive Renato Mota says the demand for financial advice will increase if Australia enters into a second recession, but added digital advice used during lockdowns will not replace face-to-face meetings in the long-run.
IOOF has sought to become the country’s largest and cheapest destination for financial advice by embarking on a buying spree – finalising the takeovers of ANZ’s pensions and insurance business last year and National Australia Bank’s MLC this year.
However, substantial costs associated with its acquisition strategy combined with the group’s decision to withhold guidance on future earnings at its full-year results on Thursday spooked investors, triggering a 10 per cent stock fall by afternoon trade.
Mr Mota said the current lockdowns were causing an “incredibly volatile and uncertain environment” which would increase the need for financial advice, especially if the Australian economy were to dip into another recession.
“In terms of the correlation between advice and economic stress, there is no doubt that we see an increase in demand for financial advice in times of economic stress and downturns,” Mr Mota said. “One of the challenges is, how do you meet that demand?”
With major cities around Australia stuck in persistent lockdowns, Mr Mota said the financial advice industry had adapted quickly to remote working but added it would not replace the face-to-face model.
“The concept of robo-advice has been around for a number of years and the take-up has been limited, which reinforces the importance of the humanistic,” Mr Mota said. ” Financial services, like other services, are a relationship and people-oriented capability. In that context, I don’t foresee a future where everything can be done online.”
The comments come as IOOF reported a statutory loss of $143 million for the 12 months to June 30 and declared shareholders would receive a full-year dividend of 23 cents per share, 33 per cent lower than the previous year. The results were largely in-line with market expectations, while IOOF’s core profits of $147.8 million beating Citi’s forecasts by 6 per cent.