IOOF and BT ended their relationship agreement on Thursday, with HUB24 now acting as the wealth giant’s platform and administration and custody provider.
IOOF and HUB24 are also expected to collaborate on the development of a range of solutions, including private label super products and investment products, with IOOF entities being the responsible governing entities.
Previously, it was estimated that the cost of a transition from BT would cost IOOF between $30 million and $70 million and, combined with anticipated customer attrition, made the move unattractive.
But IOOF will now receive a one-time settlement of $80 million before taxes, which takes into account amounts owed in recognition of its rights under the agreement.
The financial impact of the deal’s end now includes a decline in IOOF’s fiscal 2021 revenue of $15 million pre-tax on $18.8 billion in funds under advice as of November 30.
Beyond 2021, IOOF estimated that the impact on full-year revenues would decline significantly due to cash outflows and lower prices.
IOOF chief executive Renato Mota said the change aligned with his company’s open architecture strategy, allowing customers to choose.
“As IOOF embarks on its own platform simplification strategy, alignment with vendors who fit into our open architecture approach will be critical to continuing to enable our customers to choose,” said Mr. Mota.
“The decision to change the supplier relationship now provides us with long-term certainty as we focus on the effective implementation of our new platform strategy and increasing returns for shareholders.
The agreement with HUB24, which is subject to approval by administrators and service operators, will be a further expansion of IOOF’s existing agreements with other platform providers, as well as its own proprietary products in as part of the Evolve project.
IOOF’s managed account solution, MPS, is expected to be available on new products. IOOF plans to launch these products in the first half of 2021.
“The new partnership agreement with HUB24 is a positive step forward for IOOF,” said Mr Mota.
“We continue to focus on our proprietary Evolve platform; However, it is important that we continue to work with partners whose long-term business strategy and ability to enable choices align with ours.
