IOOF embarks on pro bono advice offensive

IOOF will provide at least 50,000 hours of free financial advice during the coronavirus downturn, in an industry-first initiative aimed at turning around the wealth manager's public standing and improving the quality of financial decision making.

Two-thirds of IOOF's 1300-strong adviser network are expected to volunteer a minimum of 60 hours of community service over the next three months, giving free guidance to consumers facing hardship or struggling to make sense of economic stimulus measures such as the JobKeeper program and the superannuation early release scheme.

To help underwrite the effort, IOOF will waive licence fees for participating advisers until September, when the program will be reviewed and potentially extended, at an anticipated hit of around $2 million to the wealth manager's bottom line.

IOOF chief executive Renato Mota said the project was an attempt to provide consumers with a taste of professional advice, which the federal government and corporate regulator have acknowledged has become prohibitively expensive for the mass market.

“This for many will be the first time they have had the opportunity to sit in front of a professional financial adviser and seek help,” Mr Mota said.

“I think we will learn a lot about how people consume and receive help and advice and I am hopeful we can use it to help inform the business model of the future.”

The initiative was foreshadowed by the revelation in April that IOOF was working on a coronavirus-inspired plan to help the "80 per cent of the population that can't access advice".

Mr Mota said the project was primarily motivated by a sense of public duty and to advocate for the value of good advice, but it also provided an opportunity for IOOF to rebuild a reputation tarnished by the findings of the Hayne royal commission.

“Coming out of COVID-19 we have built an increasing level of confidence in our own ability to deliver when it matters, and with that has come a desire to play a bigger role in community and policy issues,” he said.

“If we do the right thing by the community and our clients, I am pretty sure that our brand will look after itself.”

A note of support to Mr Mota from an aligned adviser, seen by The Australian Financial Review, urged the importance of "being seen to help" the community, given the industry's recent troubled past.

It comes as a class action lawsuit against IOOF was dropped in the Supreme Court, but another brought by Shine Lawyers is just ramping up in the courts.

General and personal advice

As part of the so-called IOOF community offer, consumers can get free access to a financial education hub, providing general information about relevant coronavirus stimulus measures, tax and superannuation.

The company has also wheeled out its Wealth Report financial assessment technology, which normally forms part of its paid, professional advice and will be made available for complimentary access.

Consumers can apply for one-on-one guidance with a financial adviser, which could take the form of information, general advice or more comprehensive financial planning. Participating firms will set their own eligibility criteria and determine which pro bono clients to see in more depth.

“Our best estimate is that general knowledge and general advice can address the bulk of the immediate thematic issues like access to early release and JobKeeper,” Mr Mota said. “But if it turns out everyone needs personal advice then that is a great outcome.”

The project comes as consensus grows that rising regulations had resulted in a diminishing supply of financial advice and pushed up the cost for many mass-market and lower balance consumers.

The Australian Securities and Investments Commission relaxed the rules in April, removing paperwork requirements for professionals to advise on the superannuation early release scheme.

However, the regulator capped the temporarily deregulated advice at $300 per customer, which the Association of Financial Advisers said would make the advice unprofitable to provide and that a major pro bono effort would be required from the industry.

Consumer group Choice has warned against efforts to ease the access of vulnerable consumers to the financial advice industry, which it alleges is still plagued by dangerous conflicts of interest.

Mr Mota dismissed Choice's concerns and said he was confident of the quality of the services IOOF's advisers would provide consumers.

“The idea that it is not in peoples’ interests to access a level of professionalism they otherwise couldn't afford is puzzling to me,” he said.

“We have done a lot of work to make sure the needs of clients are front of mind.”

He pointed to IOOF's reform of its superannuation trustee business to create independence from the company's executive and board and its "open architecture" policy on adviser investment and technology use.