Insignia Financial Ltd. (IFL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Annual General Meeting of Insignia Financial Limited. My name is Allan Griffiths, and I'm the Chairman of Directors of Insignia Financial Limited, and I'll also act as Chairman of this meeting. We have a quorum, so I'm pleased to declare the meeting open. I'm delighted to also extend a warm welcome to our shareholders who are participating through the webcast. The minutes of the 2021 Annual General Meeting are available for inspection by any shareholder by contacting the Company Secretary. The Notice of Meeting was distributed to all shareholders, and copies are also available on the company's website. I'll take the Notice of Meeting as read. Let me outline the proceedings for today's meeting. I will start off by presenting an overview of the year and a review of our performance. Our Chief Executive Officer will then follow with his address. Following that, I will table the financial reports and invite questions or comments. We will then have the Reelection and Election of Directors, followed by a resolution to adopt the Remuneration Report for the year ended 30th of June 2022 and then a resolution to Grant Performance Rights to the Chief Executive Officer and Managing Director. At the conclusion of the meeting, please join us for refreshments outside. Let me begin by introducing your other directors. They are: Renato Mota, our Chief Executive Officer and Managing Director; Andrew Bloore, Elizabeth Flynn, John Selak and Michelle Somerville. I would also like to introduce Chris Weldon, who is representing the company's auditors, KPMG. Chris? Also from our share registry, Boardroom Proprietary Limited, we have Sarah Jenkins and her team. Sarah will act as the returning officer for the poll to be held later in the meeting. Also present today, our Chief Financial Officer, David Chalmers; and Adrianna Bisogni, our Group Company Secretary. Let me move now to my address. And I would like to start by acknowledging the traditional custodians of country on which we meet today, and recognize their continuing connections to land, waters and communities where I stand, I acknowledge the Wurundjeri people of the Kulin Nation and pay my respects to Aboriginal and Torres Strait Islander peoples and their cultures and to elders, past and present. It's almost a year since you, our shareholders, endorsed the decision to change our company name to Insignia Financial Limited. To unite our people from three heritage organizations, IOOF, ANZ Wealth and MLC around our shared ambition of creating financial wellbeing for every Australian, and what a year it has been. The COVID-19 pandemic continued to impact the economy, our ways of working and many of our people. Now with only a few restrictions remaining we can now start to see the new normal emerging. That being said, the past year and the current macroeconomic environment is still not short of challenges. From the conflict in Ukraine impacting the global economy through to the inflationary pressures from the sharp rise in the cost of living, which many Australians are experiencing. As your Chair, I am committed to supporting Insignia Financial's ambition to create financial well-being for all Australians, especially during times of uncertainty. Despite the challenging external environment, we have a clear focus and have delivered on many strategic initiatives throughout the year. Our main priority over the past 12 months has been the transformation of our business through integration and simplification. We completed our first full year of MLC ownership, which pleasingly contributed to our 59% increase in underlying net profit after tax. Our increased scale as an integrated organization has started to deliver benefits with adviser numbers beginning to stabilize, improvement in platform flows and strong investment performance. As reported in our full year 2022 results, we delivered $78 million in savings and realized $124 million in annualized synergies. By the end of the first half of the financial year 2023, we will largely realized the MLC acquisition synergy target. A great achievement indeed and this accelerated outcome allows us to move into the task of simplifying the business, delivering benefits to members and shareholders. The organization continues to demonstrate its ability to execute on large-scale strategic priorities or ultimately designed to strengthen the business and improve client outcomes and experience, underpinned by our ClientFirst philosophy. In addition to our focus on delivery, we have continued to integrate environment, social and governance, ESG initiatives across our business. Climate change is a key focus of the Board and the Management team. ESG issues can have a material impact on company value and appropriate management of these issues is increasingly expected and can return value to shareholders. In terms of climate action, this year, we committed as an organization to achieve net zero carbon emissions by 2050 and further reducing our emissions from corporate operations by 2030. Importantly, in June this year, we achieved carbon neutral status across our business operations through offsetting Scope 1, 2 and 3 emissions, and we are now a Climate Active accredited organization. In addition, we delivered our first task force and climate-related financial disclosure report within the annual report to address the business and financial risks of climate change. As a further sign of our environment intent, Asset Management appointed a head of responsible investing as part of our commitment to uplifting ESG capability across the organization. We all have an important role to play in our commitment to achieving net zero emissions by 2050 and acknowledging that the sustainability of our business is intrinsically linked to the sustainability environment in the communities in which we operate. Turning to governance. Our governance framework is central to ensuring we manage our clients and members money with exemplary care. This is also the focus of the Insignia Financial Board and the Boards of our Insignia trustee entities. Insignia Financial is now one of the largest Superannuation providers in Australia, responsible for nearly 2 million Superannuation members. As a result of a number of acquisitions, including MLC and ANZ, we now have four Superannuation businesses. We are in the process of simplifying consolidating to create better outcomes for members. Following a prudential review, the Australian Prudential Regulation Authority, APRA, announced on the 3rd of November is imposing additional license conditions on the Registrable Superannuation Entity Licenses of the four Superannuation trustees. These partly supersede existing license conditions. In short, the license conditions require the Superannuation trustees to uplift their governance and risk management frameworks and practices to meet APRA's requirements. Implementation of a number of actions required on the additional license conditions has already commenced, including work to uplift products and systems. I can assure you, Insignia Financial Trustees, the Board and Executive team take their statutory and regulatory obligations seriously. We have acknowledged APRA's concerns, and we are working collaboratively with them to address these concerns and ensure we remain true to our goal of delivering better outcomes for members. Moving to our people. An important part of the culture at Insignia Financial is the belief that it's our place where we all want to belong. Diversity and inclusion scored well again in our most recent Our Voice employee survey, where 85% of employees agree Insignia Financial values diversity. That's five points above the external benchmark. We've made strong progress around gender diversity with 45% female representation in senior management roles as of the 30th of June. Our gender pay gap is less than the industry average, having decreased to 14.3%, and we look forward to the future where gender pay gap is no longer a point of discussion. One of our core values is look after me, and we acknowledge how important is to support our community. The IOOF Foundation has contributed more than [ $17 million ] to Australian communities since inception and continues to have deep impact. Our employees also contributed meaningfully through volunteer hours, which more than doubled this financial year. Financial contributions were up by over 1/3 thanks to the individual generosity of our match giving program. We hope to touch as many lives as we can and improve the wellbeing of all Australians. As I've outlined today, we have made great progress in delivering on our strategic priorities against the challenging external backdrop. We have scale across our three business lines of advice, asset management and platform administration. Insignia Financial is an even stronger business with a clear growth strategy, a track record for delivery and a determination to deliver improved experience outcomes to our clients and shareholders. And as we move into the financial year 2023, our confidence in our financial wellbeing strategy is stronger than ever. I certainly speak on behalf of the Board when I say we are committed to helping Insignia Financial build on the strong progress achieved so far, and remain focused on continuing to deliver prudent outcomes for all our stakeholders, including you, our shareholders. In closing, I'd like to thank the various boards that we have within Insignia Financial, my Board and their expertise in counsel, Renato and the executive team as well as the thousands of employees who have shown determined focus on delivering for clients every day. I believe the business is well placed to continue to deliver on its ambition to create financial wellbeing for all Australians. I now hand over to Renato to share his business update. Thanks Renato.

Thank you, Allan, and thank you all for attending our 2022 Annual General Meeting. The first we've been able to hold in person for 3 years. I hope you're enjoying the opportunity to connect. I know our people are rediscovering the importance of connection as a return to the office in a hybrid working environment. Allan referenced in his address, our new company name. And I wanted to reiterate that becoming Insignia Financial is more than simply a name change. It reflects the creation of a new organization, a new identity, bringing together our people with shed focus, purpose and culture. At Insignia Financial, we're driven by our ambition to create financial wellbeing for every Australian. And as we stand here today, we're confident we have the necessary capabilities, economic diversity and scale to deliver on that ambition. As a diversified financial wellbeing company, we have exposure to the three main economic drivers of financial wellbeing: advice, platforms, which includes Superannuation and asset management. We have a diverse range of channels to market, and this economic and channel diversity translates to both business resilience and competitive advantage. Part of this competitive advantage comes from the network effect of running these three businesses side by side. So insights and knowledge developed in one segment are shared across the other two, providing us with an ability to get closer to our clients' needs. In addition to this network effect, it's crucial that each segment has a value proposition in its own right, and a sustainable economic model to match. Just turning to the results for the year. It was through disciplined execution of our strategic priorities in '22 that we delivered a strong result and established solid foundations for future growth. Firstly, we delivered on our commitments, doing what we said we would do across our three business lines. Secondly, our strategic decisions have delivered significant turnaround in flows. And then on reflection over the last 12 months, it's clear that the MLC acquisitions provided a solid foundation and positive momentum for growth. Revisiting some of the key highlights. We produced a strong result across the board with underlying net profit after tax increasing 59% to $234.5 million. This was supported by strong synergy realization with $78 million of in-year synergies during the financial year. Net profit after tax was $36.8 million, reflecting integration and one-off costs. Total dividends of $0.236 per share were delivered for the year, including a final ordinary dividend of $0.118 per share. In terms of business unit performance, the past 12 months have been pretty eventful to say the least. We've delivered on various strategic priorities, continued our transformation journey and evolved into Insignia Financial all the while operating in a challenging external environment. In advice, the reshaping of the business is having a meaningful impact on the earnings, sustainability and quality of advice outcomes. We achieved the milestone of breakeven for the ex ANZ licensees and integrated MLC advice with Bridges under a refreshed brand, unified culture and common technology. This has generated economies of scale and broader efficiencies, thanks to shared technology and processes. Pleasingly, we delivered a significant turnaround in platform flows with $3.1 billion improvement in net funds flow over the prior corresponding period on a pro forma basis. Funds under administration totaled $198.2 billion as at June of this year, and that excludes Australian executive trustees. This has been achieved alongside an ambitious platform simplification agenda where we've delivered two system migrations during the year. Significant investment in our modern proprietary Evolve platform and other third-party platforms has improved the client experience through additional features, product enhancements and pricing initiatives and there's more to come in this space. Thanks to increased scale and cutting-edge technology, our Evolve platform is well positioned for future revenue growth. In Asset Management, the integration of MLC and IOOF investment teams under a single Chief Investment Officer, enables us to leverage our scale and streamline our product range, utilizing knowledge and skills across the combined businesses. Importantly, for our clients, we delivered strong investment performance across both our multi-asset and single asset class capabilities with approximately 87% of our funds under management exceeding objectives over 5 years. We also delivered on the sale of AET, providing further focus and simplification benefits to our organization. On our commitment to ESG, as Allan mentioned, we achieved carbon-neutral status for Insignia Financial as a clear sign of our environmental intent and our commitment to uplifting our ESG capabilities for the organization. Simplification remains a key feature of our strategic intent and a major source of value and growth opportunities for both members of our funds as well as our shareholders. As I've mentioned previously, lower cost to serve is one of the benefits of scale with these benefits being shed between members by way of lower pricing and with shareholders by way of greater growth opportunities going forward. Our continued focus on simplification and growth, combined with the strength of our balance sheet, positions us well for the continued meaningful progress we've made and sets up the business for continued success in years to come. Technology as we all know, has a crucial role to play in differentiating both what we do and how we do it. The quality of advice review was established by the government in March of this year and is concerned with ensuring that Australians have access to high-quality, affordable and accessible financial advice. In our submission to the review, we recognize that consumer financial advice needs exist along the continuum. And we see tremendous opportunity to improve the lives of Australians by making advice more accessible along that continuum. We believe innovation will help us deliver advice across different digital channels, and we're focused on using technology to improve the client experience and drive personalization. Technology also affords us the opportunity to reach those who do not currently receive financial advice. As a tool, technology can drive more efficiency for full service advisers and their clients. So for example, our Wealth Central technology is being utilized today to enhance the client experience as well as advisers by streamlining the advice processes and increasing productivity face-to-face engagement. We're also leveraging technology to free up our people to spend more time on the work that matters most, such as having meaningful interactions with clients. As we continue to navigate recent geopolitical and market events and the increasing impact of rising inflation, we remain steadfast in our ambition to create financial wellbeing for all Australians. Having successfully executed deliverables over the past year, Insignia Financial is a clear plan for developing a leading position in our industry and allowing us to capitalize on continued growth across our three business lines. I'd like to reiterate Allan's comments in relation to the recent license conditions imposed by APRA. Our plans to transform have always been built on a premise of upholding the highest standards of governance in how we serve the trustees and delivering better outcomes to our members. At this point in our transformation, we're not where we need to be. And we view these conditions as being a helpful contributor to getting us there. I, and the executive team are committed to ensuring that good governance is operationalized through our conduct and our practices. Through our upscale presence and expertise across advice, platforms, asset management, we've got the confidence in our competitive advantage and our ability to grow. We're building the foundations of our reputation and branding market through our people and our principles and ensuring this translates into organizational agility and leading technology and service through our simplification agenda. All of this ultimately goes to support our ambition and addressing a basic human need across a broad range of Australians. I'm confident we're creating a business that's relevant and resilient, ready to seize on emerging growth opportunities. and continue to deliver sustainable returns to shareholders. Just before handing back to Allan, I'd like to take a moment to thank my executive team and all our people for their ongoing commitment to striving to deliver the best outcomes we can for our clients and for you our shareholders. I'd also like to express my gratitude to Allan and the Board for their ongoing supporting counsel. So with that, thank you for your time today. I'll hand back to Allan.

Thank you, Renato. So before I move to the first item of business, let me cover some procedural matters for you. If you're eligible to vote, when you registered this morning, you would have been provided a handset and a white plastic smart card. Your name should be displayed across the top of the screen of your handset. If you are voting and do not have a handset or your name is not displayed, if you could please raise your hand now and one of our assistants will be able to help you. In a few minutes' time, I'll open the poll on all items of business. At this time, your handset will activate, and you will see the resolutions displayed on the device screen. Press the green button to open the first resolution, then press the green button again to vote. Select 1 to vote for the resolution, Select 2 to vote against the resolution and 3, if you wish to abstain from voting. Any third-party proxies should vote using the same process. This will cast any open votes you have available. You will receive a confirmation that your vote has been cast. You can change your vote prior to closing of the votes by simply selecting one of the other voting options to cancel your vote, press the X button. Once your vote has been cast, press the green button to advance to the next resolution. To return to a list of all resolutions, you can press the red triangle at any time. As outlined in the Notice of the Meeting, Insignia Financial has determined that where the Chairman is appointed as a proxy unless restricted from voting on a resolution, I will vote in accordance with the shareholders' directions. In the absence of a direction, I will vote in favor of the resolution. The Corporations Act requires resolutions to be passed by a majority greater than 50% for an ordinary resolution. For the purpose of ensuring that all votes are accurately recorded, I will call a poll in relation to all items of business, giving all shareholders the opportunity to vote rather than go to a show of hands. Voting is now open. Your handsets will activate displaying today's meeting items of business. I'll leave the polling open while we discuss the resolutions, and we'll provide you with a warning before we close voting. Please feel free to vote at any point during the question-and-answer session. I will also report on a number of proxies received by 9:30 a.m. on the 8th of November at the conclusion of discussion of each item. We'll now proceed to the first item on the agenda. The first item of business is the tabling of the financial reports and the directors and auditors reports. The financial statements for the year ended 30th of June 2022, the director's report and the auditors report were included in the 2022 annual report. They are also available on the Insignia Financial website. There is no vote required on this item of business. Shareholders will have the opportunity to raise questions on these reports or any aspect of the company's operations. Shareholders may also ask questions of the company's auditor. Such questions need to be relevant to the conduct of the audit, the preparation and the content of the audit report, the accounting policies adopted by the company and the independence of the auditor. No questions for the auditor were submitted prior to the meeting. If you have a question today for the auditor, please ask it through me. I may refer questions on either operational or accounting details to management as they arise. Answers to the questions received in advance from shareholders will now be addressed and we only received one question in advance for the meeting on the voting online site, which was, when are we going to see financial advisers actually doing something directly for clients rather than just providing twice a year pro forma advice to put everything in managed funds that does nothing for real diversification or for portfolio growth. To answer that question, Insignia Financial treats every client interaction is unique, given every client has different requirements based on their personal goals and objectives. The frequency of the clients' engagement with their adviser is based on the terms of the client service agreement as agreed with both parties. Our advisers work with clients individually to determine their risk tolerance, risk profile and objectives and based on this recommend an appropriate strategy to diversify and manage risk while maximizing the chances of achieving their objectives. Managed Funds in a range of asset classes are one way of achieving this, but other strategies and investment types are also used depending on the clients' circumstances. Whilst portfolio growth is an important factor for many of our clients. Our adviser network also supports and provides advice in areas such as estate planning, cash flow management and insurance prediction to provide financial wellbeing and peace of mind. I now open the matter Item 1, receipt of financial statements for discussion. If you wish to ask a question, please raise your hand, and someone will hand you a microphone. Please identify yourself as a shareholder or proxy and state your name. If you have a question in relation to the remuneration report, please hold on until question -- that question until we reach Item 3. Please note that only shareholders holding a Lumi handset or a blue nonvoting shareholder card are entitled to ask questions at this meeting. I'll please now open to any questions that may come from the floor. Just get a microphone to you, Christine.

Okay. Thank you, Chair, and thank you very much for your report today. We acknowledge it much -- I'm Christine Haydon from the Australian Shareholders Association, the volunteer monitor for Insignia. We acknowledge that much work has been done on ESG issues, particularly on net zero and sustainable development goals. And also I'd like to acknowledge the excellent work that's been done in the integration of MLC, certainly being 18 months ahead is very good result. We would like to ask a question on environmental, social and governance. And particularly, I don't believe this is in your annual report. But when we look at governance, one of the two requirements or two things that you're suggesting you're going to be measured by, is responsible investment development with a unified approach that we're responsible -- under the heading of Responsible Investment, there's sentence about developing unified approach to responsible investing across the fiduciary entities. And the second part of that is to influence positive social and environmental outcomes through active ownership and proxy voting. Now are we to conclude from that, that you're going to be putting an ESG lens across your investments in those entities and also be active in the voting of those companies?

A simple answer is yes, but I think you deserve a more detailed answer. So I've also got Steve Black here today. Steve is our Head of ESG in the organization. So I think you probably deserve a more fulsome response.

Thank you for your question. So the -- to tackle the first question, the alignment of our responsible investment approach, we have a number of responsible investment policy statements for the different trustees that were brought in as part of -- as the Chair and Renato mentioned earlier, the merger of the three organizations. So we have four responsible Superannuation entities, all of which had slightly different responsible investment approaches. What we've done is -- and we've completed that piece of work as of August this year has aligned those approaches. Responsible investment is the way in which we apply ESG factors to our investment business. We have a -- we have done this for a number of years now. We have had a responsible investment statement that's publicly available on all of the respective sites in our corporate site, if you want to have a look. And that's an acknowledgment as Renato and Allan mentioned that ESG factors can have a material effect on long-term performance for our members, and we acknowledge that. And so we're looking to align that. The second part of your question related to voting, yes. And so what we're looking to do is align our proxy voting processes across all of those entities as well. So for example, MLC had a different proxy voting approach for its Superannuation funds than [indiscernible]. And so I think there was a mention earlier that James Taylor, who's our new Head of Responsible Investment, one of the things he'll be working on is aligning that approach to make sure that we are voting in a way that is in members' best interest and is consistent across all of our Superannuation entities.

Okay, thank you very much for that. Insignia has always been a dividend payer. And in looking at the debt-to-equity ratio and high dividends, how sustainable is that going into the future with a high investment -- the high interest environment? Would you like to just give us a bit more flavor on that one, please?

Well, our stated dividend policy is to pay dividends between 60% and 90%. And we are still committed to that policy. We refinanced all our debt earlier this year. So we're confident for the foreseeable future that, that can be maintained.

Thank you, Chair. And just one last one. We also would like to ask a question of the directors that are up for renomination if we may. But one last one on the APRA recent involvement that you alluded to. One of our understandings is there was an independent expert appointed because of the slow transfer of funds -- of money out of funds. So would you like to just give us a bit more information on that? And why was it so slow to transfer funds from investors?

First of all, the high-level answer on the question you asked. I mean, if you read carefully through the statements that APRA made, I mean we are a significantly different organization today than we were in 2019. And from the regulatory perspective, we're now what is classified as a Tier 1 organization, which simply means our governance needs to go to another level. We admit, we're not at that high level that is required. So we have work to do. And quite frankly, the -- what APRA put in front of us is a road map to actually ensure that gets done. And so this is just the regulator doing what they should be doing to protect the member's best interest, and we will follow that through. And the more detailed -- as you talked about, is really a systems issue that needs to be fixed. And that's being fixed.

To the chair, [indiscernible]. Going back some 4 to 5 years ago, the share price was nudging $11. Some 2 to 3 years ago, the share price was nudging $8. Currently, it's nudging $3 on the [ downside ]. I know we've had rural commissions. I know we've had pandemics. I know we've got governance problems. When can we see a substantial increase in the share price? Bear in mind that we're making all this profit in the initial stages out of the MLC acquisition.

Thank you. Your questions are very fair and reasonable question. I understand exactly where you're coming from. Yes, the whole financial services industry went through a difficult period in 2018 with the Royal Commission. And certainly as a Board, we had to reset the whole business. And that's the journey that we've been on in the short term, getting scale that we talked about with the acquisitions of ANZ and MLC. We are delivering on that. You can see the profit numbers are up. Unfortunately, we've got bad market timing at the moment, of course, with markets in general are down at the moment. But we are confident, we stick to our strategic plan and keep delivering, as we've talked about here today in time, that share price will improve. And we're trading in a model of about 7x to 8x profit, which is I believe, is voluntarily undervalued at the moment. And sooner or later, the market will start to recognize our strategy. And you've seen pretty impressed in the last week a recent conference that's taking place this week on the direction of financial advice, and there's a high recognition out there that in the main, Australians are under-advised with good financial advice. So the marketplace of what we have to offer is big. We are just simply readjusting, realigning the business for the last couple of years. That journey is continuing. We're making good progress. And I believe sooner or later, we'll get recognized in the share price. But appreciate it's been a rocky journey to this point. But going forward, we're very confident.

I'll just ask one more question, if I could, please. Adviser numbers are slipping, and they're still slipping slightly.

Which number, sorry?

The adviser numbers. To my knowledge, advisers have only got to do six interviews per week. Now not everyone probably is aware of that, but that's my interpretation of what is happening out there. As a result of all the compliance and everything else they've got to do, they're averaging about six, seven a week. Surely, that's not enough to achieve the desired results we want to achieve. Now I could be wrong with those figures. I'm sure I'm not. And I just think we need to arrest the slide in adviser numbers to get more across the line and increase in some way, and I've got a few suggestions there, increase in some way to get these numbers of interviews up per week if we're going to get to where we want to go. That's my feeling.

Yes. I think I'll ask Renato to comment on that simply because he's living and breathing this every day, and he's out there with advisers every day. So -- and Renato is also speaking on this very subject earlier this week at the conference in Sydney. So Renato, would you like to make some comments? And get a microphone to you.

I think I might -- so hopefully you can hear me. It's a great point. So there is, on average, an adviser can manage about 120 relationships or client relationships as part of their panel. And what we're seeing most advisers are probably at that point of capacity, and some of that has to do with the compliance and administration they are required to do to make sure that we're complying with the laws. So the challenge, I think, for the whole industry is how do we make advisers more productive? How can you have advisers maybe servicing 140 or 150 clients instead of 120. And I think there are opportunities that are coming out of the Michelle [indiscernible] view. So absolutely, and you heard me talk about technology. Technology is aimed about making advisers more efficient, so they can see more advisers on a weekly basis. We need to be cautious that it's not simply asking advisers to do more per week. We need to mention that they're doing the right activities and the right way because we're really conscious of the costs associated with inappropriate advice. But there's significant opportunity for advice. The other aspect I'd mentioned around the adviser number is dropping. As you would know, and we've mentioned many times before, some of that advisers and the self-employed advisers actually cost us money. So supporting them the self-employed model is a costly exercise, and we're really looking to look at how we support those advisers to reduce some of those loss-making activities.

You just want to comment, Renato, about adviser numbers and what's been happen with education standards.

Yes, that's right. So if you look at our adviser numbers, our market share, so the proportion of the advisers that are with us have actually stayed constant, and that's because the whole adviser market is shrinking. And that's in part because of higher education standards, exams that are required. There are many advisers that are choosing to leave. We've had some choose to leave our group, but no more, no less than those that have left the broader industry. So we're holding our own from a market share perspective. However, your point is still the right one, which is what occupies us is how do we make advisers more productive and how do we give them capacity to see more clients.

Could I make a suggestion that the adviser has got to go back to the office and do up a plan, and that takes a fair bit of time or get someone else in the office to do the plan. Is there any point in getting the person in the office that does the plan to sit with the adviser while the adviser does that. And I think a lot less time will be taken from the adviser for the person to put the plan together and the go to the rise that it's fine adjust and sent it down from there or make the adjustments. So I just wondered whether that's possible that the person in the office sitting with the adviser at most of the time.

It is possible, and it's exactly one of the things that we've actually now started doing in bridges, for example. So those sort of ways of working that are more efficient that actually allow us to get closer to the client, not just the adviser, but everyone that supports the adviser are absolutely the things that we're actually looking to implement as we speak. So you're actually, you're asking the right question.

Good morning Mr. Chair. Thank you for your update earlier this morning. My question was along similar lines to the previous question. So my name is [indiscernible]. I've been an investor in the business for many years through the various iterations of the company over the years. And we've seen ups and downs in the last few years have been very difficult years for the company. I guess the question is similar to the previous question, but I guess looking at it slightly differently. You spoke about some results over the past year, some growth in the business, particularly from the integration of the acquisitions and the synergies arising from those businesses. I guess when do you expect that you'll see some stability in new flows into the business and that we reach a position where funds are consistently growing forward and that will, I guess, drive the business growth forward.

Yes. I'll ask Renato make couple of comments in a minute. But I think you've seen the last 3 quarters' results have actually been strong compared to the previous quarters and the previous few years. So the benefits of the integration and now starting to come through. But Renato, do you want to get more granularity around that?

Yes. It's the right question. The question, we, as the management team ask ourselves is, how do we grow our funds, and that is through net funds flow. I think it's worth recognizing that in the acquisitions of the ANZ P&I business and MLC, we acquired two businesses that were net outflow. Now we made those acquisitions quite consciously and knowing that, that was the case, but also recognizing that we felt we could improve that. We felt we could get both those businesses collectively, along with our own Internet funds flow positive. And if you look at the traditional -- what was the [ IWF ] business, but the traditional Insignia business, that has always been in funds flow positive. I think adding them together actually improves our prospects of getting there and actually really a springboarding into meaningful increases in market share and many full net funds flow on a per annum basis. It's going to take a bit of time to get there. I think we've seen a $3 billion improvement in net funds flow in a single year. We're not done. We need to continue to improve, and we won't be satisfied until the whole business is in net funds flow reliably and sustainably. So that's absolutely the strategic intent behind some of these acquisitions, but we acquired some businesses where their starting point was actually net our flows and in some cases, quite considerably.

We look forward to seeing that continuation of the last few quarters. If I may ask another question Mr. Chair. This is a little bit along the lines of Christine's question in relation to proxies perhaps a little bit more detailed and specific. I'm just wondering if when you do merge and, I guess, upgrade the platforms, you might be able to introduce some functionality for investors in the platforms we'll be able to vote the shares that they hold in the platforms. I'll just give you as an example and I'm creating a personal example here. I am an investor currently in the MLC pension super and wrap accounts. So for all intents and purposes, I own shares that I hold in the wrap account. So I buy and I sell shares in those accounts by executing the orders through the NAV trading platform. Unfortunately, I can't vote those shares on the platform because they're aimed by or they billed by the custodian. I'm looking forward to the future, at some point, where there is some system you can develop, whereby I can direct the custodian to be able to vote those shares on my behalf because at the moment, I understand those shares are effectively wasted. And I think that's a shame. So I just wondering if you could perhaps expand on that a little bit. It's probably something for your product platform development approach.

Well, I'll make a quick comment and Renato can make a comment, but I think we'd have to take that on notice. Yes, we don't do it at the moment, but so many suggestion has a lot of validity. Renato?

Yes, absolutely. And I think recognizing that we've today got different platforms with different levels of functionality. So how MLC wrap does it, is it a little bit different to the way the Evolve system does it, recognizing that Evolve is our most contemporary, most modern functionality. We've had those conversations internally around how we build out direct equity capability on Evolve. Off the top of my head, I don't know exactly where we're at with that one. But certainly, that's something that is absolutely key to our evolution in terms of allowing people to actually fully participate via our platform service in direct equity ownership. So it is actually already been discussed, and I'm confident it's on road map.

Mr. Chairman, could you elaborate on whether you've got any major write-offs coming through obsolescence for software systems and also envisage major capital expenditure or operating expenditures meaning how you're doing it for further software development programs?

Actually, I might go straight to our Chief Financial Officer and just get a microphone to you, David. Its David Chalmers, our CFO.

Thank you. Good morning, everyone. Thank you for the question. So the approach that we take in terms of software development is we tend to expense all of that rather than capitalize it. That's been our approach for some time. So if you look at the Evolve system, for example, that has not been capitalized. So -- and part of the reason we do it is to address exactly the point I think you're getting at, which is with a lot of software development. There are always those risks as product life cycles come in of having to accelerate amortization or depreciation. So there's nothing there that I would highlight in terms of the balance sheet, specifically in relation to software. As I said, that's mainly because we do predominantly expense.

Second part of that question, was there any major expenditure then coming in relation to further developments that you have to implement either because of APRA or other programs that you've got in trying?

Yes. So the major programs of spend that we have in place around what Renato and the Chair were talking about in terms of platform consolidation. So those are amounts that we've set out in terms of the next -- and those come in various phases over many years. So we've set out what we expect those spendings to be over the short term in terms of that where we have visibility. And those are sort of taken into account when we do our capital planning. So a lot of those are in terms of the functionality, and we've talked a few times around aligning functionality of systems. It's the work that we need to do in terms of bringing those together.

Are there any further questions? If there's no further questions can I -- sorry we've got one more.

Just ask one more question. I don't want to hog this microphone. I'd just like to know what Insignia are doing with regard to getting new funds in the door? So if we're going to go ahead in leaps and bounds, what are we doing in relation to advertising, our new name and also telling people what we do and how we're going to get funds in the door that might be the nice way to say.

No, my answer is everything we can, but I'll go to a more operational granular detail. Renato?

And maybe that follows on from the question earlier, which is net funds flow is the driver economically of that business. You touched on an important point there around branding. And absolutely, I think we're still scratching the surface on really building the reputation and brand of Insignia. But we shouldn't also forget that we acquired a really powerful brand in MLC and putting more support, more branding power behind MLC, which will be a really important consumer brand for our organization that represents many of our funds. I think something you can expect to continue to see. When we think about net funds flow, we talk about a net in that -- there are two aspects of that is getting more money in the door but also not losing side, let's hold on to the money that we already have. And I think as a business, there's a tremendous opportunity to do more with existing clients and improve our outflows. So I think we need to tackle both of those. And absolutely, branding and reputation is a big part of that.

Any further questions on these issues? Well, once again, thank you for those very good questions and no further questions, I declare that the Financial statements and reports have been tabled at the meeting and have been duly received and considered. The remaining items on the agenda require resolutions from the meeting. Following discussions with each item business, I will display details of the proxies received on the screen behind me. The next item is the reelection of Michelle Somerville as a director. And Michelle has been a director of the company since October 2019. Michelle is Chair of the Group Audit Committee and a member of the Group Risk and Compliance, Group People and Remuneration and group Nominations Committees. In accordance with the company's constitution, Michelle holds office until this meeting and being eligible, she offers herself for reelection. Michelle is an experienced Non-Executive Director brings deep and relevant finance, risk and governance experience to the Board, having worked in the financial services industry in both her executive and non-executive roles. Previously, she was an audit partner with KPMG Australia for nearly 14 years with a focus on the financial services industry in both Australia and overseas. Since 2015 Ms. Somerville has been a Non-Executive Director of the GPT Group. I will now invite Michelle to briefly address the meeting. Thank you, Michelle.

Thank you, Allan, and good morning, ladies and gentlemen. I feel very privileged to be part of the Insignia Board and Chairman of the Audit Committee. As Allan mentioned, I started my professional career with KPMG and over many years, worked with top-tier financial services and industrial clients, gaining a deep understanding of their businesses, how they operated, the risks they were managing and the integrity of their financial reporting processes. The last few years have seen significant focus on corporate governance and the role of directors and I believe my background has allowed me to contribute to the Board discussions during this time. And in particular, I feel I have contributed positively to deliberations around continuing to enhance the governance structure across the organization. And this is included, in particular, greater collaboration with the chairs of the Audit committees that exist right across the organization. As an organization, we've moved to an enhanced internal audit function with a co-source partner and the Group Audit Committee that I'm Chair of has overseen that process. We have all worked effectively together during the COVID lockdowns in Melbourne, which has certainly been challenging over the last few years. And finally, certainly, over the last 12 to 18 months, there has been further enhancement of the quality and effectiveness of the finance function. And with your support, I look forward to continuing in my role. Thank you.

Well, Board endorses and recommends the reelection of Michelle as a Director. And is there any questions or discussion? Christine?

Thank you, Mr. Chair. Michelle, you probably [ cared it ], but we're going to ask you, could you elaborate on your personal contribution that enhance the value of being on Board to your retail shareholders?

Thank you, Christine. I think the main contribution for me on the Board is as Chair of the Audit Committee. And some of the things I mentioned earlier have been the key focus of the Audit Committee over the last couple of years. And I did mention them earlier. So they're the main that's what I would say would be the main contribution.

I'd also add a comment to that. I think one of the other great contributions I think Michelle makes is being a financial services company, it's a complex business, and we actually have three financial boards in the company. We had the main board, which are here today. We have the Superannuation Trustee Board, and we have the Responsible Entity Board each have their own audit and risk committees. And Michelle does a great job in what I call harmonizing for them in another word, the various chairs of the various other boards as well too. So there's a lot of what I would call behind the scene works that needs to go on to have alignment. All right, there's no further questions on that. The company has received the following proxies displayed on the slide in relation to this resolution and now I'll move on to the next item. Item 2(b) is the reelection of John Selak as a director. John was appointed as a Director of the company in October 2016. In accordance with the company's constitution, John holds office until this meeting and being eligible, offers himself for reelection. John is Chair of the Group People and Remuneration Committee and a member of the group audit, Group Risk and Compliance and Group Nominations Committees. John has over 40 years' experience in the financial and advisory services industry, from 2000 to 2016, he was a partner in the corporate finance practice of Ernst & Young, providing valuation services to a broad range of local and international clients and also serving as the global corporate finance executive. From 2014 to 2017, Mr. Selak was an advisory Board member of Quest Apartment Hotels. From 2016 to 2020, Mr. Selak was a Non-Executive Director of National Tiles and Chairman of Corsair Capital until April 2021. Mr. Selak is currently a Non-Exec Director of Turosi Food Solutions. I'll now invite John to briefly address the meeting. Thank you, John.

Thank you, Allan. And good morning, ladies and gentlemen. As Allan has said, I spent some 16 years at Ernst & Young in the corporate finance practice before retiring in 2016 and joining the Board of Insignia Financial. At Insignia, I was an active member of the due diligence committee that I oversaw the acquisition of MLC. And post the [ Hayne Well ] Commission, as Chair of the Group People and Remuneration Committee, I oversaw the reconfiguration of our remuneration framework, which essentially involve the elimination of short-term incentives and the introduction of 4-year vesting long-term incentives. We're also setting up. We've established a Financial Account Regime, FAR, committee to oversee and prepare ourselves for the interaction of FAR, which will be sometime next year. We've harmonized our remuneration framework across the businesses following the acquisition of MLC, and I think we're well placed for what comes forward with SPS 511 and the FAR regime next year. Thank you.

So your Board endorses and recommends the election of John as a Director. Are there any questions on this motion?

We would like to ask John, the same question in terms of fairness. So John, could you -- I think you probably again covered it. But it's a small Board. It's a hard-working Board. We acknowledge that. But if you'd like to just talk about your personal accomplishments.

Thank you again, just restating that I was actively involved in the acquisition of MLC. And I believe and believe then and continue to believe that on a risk-weighted basis, it was a -- it was a really good deal for the business and has now set us up for growth going forward. It's given us the scale that we need to be successful in this marketplace, where we've got margin compression and other challenges and headwinds. And also as Chair of the Group Remuneration and People Committee, there's been a fair bit of realignment and I've been involved not only that, but harmonizing all our remuneration frameworks across the various parts of our business. So we're well prepared for the new regulatory regime that's coming into place next year.

Thank you, John. The company has received the proxies displayed on the slide in relation to this resolution. I intend to vote any open proxies that I hold in favor of the resolution. The next item of business is the adoption of the remuneration report. The Corporations Act provides that the vote on the rem report is advisory only and does not bind the company. The rem report format includes a snapshot of our policies and practices and aims to effectively communicate to our rem arrangements to shareholders. The company's rem report for the period ended 30th of June 2022, is included at Page 65 of the Annual Report. Are there any questions in relation to this report?

Thank you, Chair. Could we just please ask for a more rem report that we can actually very quickly see what -- I mean I know you're partway through a 4-year period, and I think you're doing a really good job. But it's very hard to just pick up on what the long-term incentive is in terms of dollar value, et cetera. So is there an easier way of describing that within the framework of the annual report so that we don't have to wait through a whole lot of pages and then spend time on a calculator, trying to work it out.

Thank you. I'll get John to elaborate a little bit more in a minute, but I'd like to think we've come a long way in the last 4 years in terms of simplifying it. We've certainly simplified the whole executive room structure. Admittedly, we're going to have to revisit all that again next year, as John was alluding to with changes that are coming from the regulator. But John, would you want to perhaps elaborate a little bit more?

Thanks, Allan. Thanks for the question. It's certainly a work in progress for us. So there's a balance of providing too much information and not enough information. I think that we've come a long way in the last 2 or 3 years in terms of what we're disclosing and how we're disclosing it. And the job is not finished yet. So we need to be more conscious of what is happening with the FAR regime, and SPS 511. The incentives are now framed. We've got 40% TSR, 10% financial, then we've got about 50% nonfinancial, which includes ClientFirst, which includes 25% for individual goals, it includes 5% for the community and so on. So we've got a lot of moving parts. As I said, we've also had to harmonize. We've got different key people in the structure now, again, part of the harmonization. So it is an ongoing process, and we hope to show further improvement and simplification next year. But unfortunately, the environment we live in, it's not simple. And so the information we need to present is by necessity is quite extensive.

Thank you through the Chair. Can we just say a knowledge that you are doing a lot of work. And certainly, we can see great improvement. But again, I just have to say, we represent retail shareholders. And from a retail shareholder perspective, we'd just like to know what people get paid for doing what they work, what it is in the immediate period, what it is in the short-term incentive and what it is in the long-term incentive? From our point of view, fairly simple. If we could do that, that would be absolutely fantastic.

The simple part about that is that there are no short-term incentives other than for our Chief Investment Officer. And so we made it -- so it's basically long-term incentives. The far regime, we've got a 4-year vesting period. It's now going to have to go after 6 years for the Chief Executive and 5 years for the others. So it's not a simple thing to do.

Thank you for the questions, Christine. The company has received the proxies displayed on the slide in relation to this resolution. I intend to vote any open proxies that I hold in favor of the resolution. The next item of business is the grant of performance rights to the Chief Executive Officer and Managing Director. As we explained in the rem report and Notice of Meeting, the value of the performance rights to be granted the Chief Executive Officer was determined by the Board as part of the Chief Executive Officer's total reward package, which was reviewed as part of the redesign of the executive rem framework. Proposed terms of the performance rights are explained in the rem report at Section 3, and include provision for variable Rem provided in the form of securities in the company as part of the company's executive equity plan. The Executive Equity Plan was introduced as part of the redesign executive remuneration framework, the Executive Equity planning framework supports and Insignia Financial's cultural and remuneration principles and the measures underpinning the framework are aligned with the key strategic value drivers of the business, both short and long term to enable enduring performance. The performance rights upon which you are now asked to vote will be assessed by a total shareholder return performance hurdle as well as financial and nonfinancial measures as set out on Page 6 of the Notice of Meeting and Page 67 of the annual report. And I think earlier on, John, elaborate a little bit more on that, but are there any further questions or discussion on this motion? Okay. Thank you. The company has received the proxies displayed on the slide in relation to this resolution. I intend to vote any open proxies that I hold in favor of the resolution. As all items have now been discussed, I will shortly close the voting. Please now ensure that you've entered your selection for each resolution. If you require any assistance, please raise your hand and an assistant will be happy to help. So voting is now closed. And Sarah Jenkins from Boardroom is appointed to act as the returning officer for the purpose of the poll. The results of the poll will be announced on the ASX announcement platform and placed on this Insignia Financial website later today. I can advise that based on proxies received and the votes on the floor that is likely that each of the resolutions put for today will be carried. Ladies and gentlemen, the business of the meeting is now concluded, and I thank you for your attendance and declare the meeting closed. And the directors here, senior management and I would be pleased if you join us outside for a morning tea. Thank you.