Insignia Financial (ASX:IFL) reported first-half FY2026 results for the six months ended 31 December 2025, highlighting higher average funds under management and administration (FUMA), positive net flows, and continued execution of its cost-out program. Chief Executive Officer Scott Hartley said the group’s performance reflected progress against its “2030 vision” to become Australia’s leading and most efficient diversified wealth manager by 2030.
Profitability improves as cost initiatives gain traction
Hartley said underlying net profit after tax (UNPAT) rose 6% to AUD 132 million, supported by higher average FUMA and lower costs. Net revenue increased 1.8% to AUD 718.2 million, driven primarily by average FUMA growth of 6% to AUD 339 billion, up AUD 19 billion.
On costs, management emphasized progress in lowering ongoing expenses while changing how it reports investment spending. Base operating expenses declined 6.4% to AUD 449.2 million, while total operating expenses decreased 0.5% to AUD 480 million. Chalmers said the company now separates total operating expenses into “base OpEx” (business-as-usual) and “reinvestment OpEx” (discretionary growth investments), with investors expected to see average reinvestment OpEx of AUD 60 million to AUD 80 million per annum across the five-year plan period.
Both Hartley and Chalmers pointed to a sharp decline in “below-the-line” cash costs. Hartley said below-the-line cash costs reduced from AUD 153 million to AUD 16 million, while Chalmers said UNPAT adjusted cash items fell from AUD 153 million to AUD 15.9 million, reflecting completion of separation projects and reclassification of project spend into above-the-line operating expenses.
Revenue margin declines, but cost-to-income ratio improves
Group net revenue margin declined to 42 basis points from 43.8 basis points, reflecting a mix of margin dynamics across business lines. Hartley said Master Trust was favorable, while Wrap was lower due to the timing of initiatives.
Chalmers walked through the key drivers behind revenue movements:
- FUMA-related revenues increased by AUD 35.5 million amid strong markets (market growth of 3.9% over the six months) and higher average FUMA.
- Master Trust margins declined by AUD 21.7 million, reflecting the full-year impact of pricing changes to MasterKey and Plum implemented in October 2024, with trustee funding support progressively scaling down.
- Wrap margins decreased by AUD 8.5 million following changes to administration pricing fees implemented 1 June 2025.
- Asset Management margins were AUD 6.3 million lower, driven largely by the divestment of the U.K. commercial property manager Orchard Street in October 2025 and repricing of the MLC MultiSeries suite in June 2025.
- Advice revenues increased by AUD 7.9 million, supported by client growth, higher average fees following pricing increases, and stronger market-linked fees.
Despite margin pressure, Hartley said the group’s cost-to-income ratio improved to 63% from 68%, attributing the change to base expense reductions and ongoing cost discipline.
Business highlights: Advice, Wrap, Master Trust and Asset Management
In Advice, Hartley said Insignia delivered higher net revenue and an improved cost-to-income ratio, driven by adviser efficiency, net new client growth, and a focus on higher value clients. Revenue per adviser increased 15% versus the prior corresponding period. He also noted external recognition for Shadforth advisers, including 27 Shadforth advisers in Barron’s Top 150 and five in the FS Power50. Hartley said Shadforth’s acquisition of PMD Financial Advisers added around 400 client families and over AUD 700 million in funds under advice.
In Wrap, Hartley said MLC Expand delivered AUD 3.3 billion in net inflows in the half and that Wrap scale remained above AUD 110 billion in funds under administration. He said cost-to-serve reduced and EBITDA increased, reflecting cost-out benefits. However, Hartley and Chalmers said Wrap margins were lower than guidance due to product mix changes, fee capping impacts from higher account balances, and delayed migrations of external platforms to Expand.
In Master Trust, Hartley said the transition to SS&C was already delivering cost savings. The company completed the transition of custody services for MLC to BNP Paribas in October 2025, and Hartley said cost-to-serve improved to 32 basis points from 36, while EBITDA increased to AUD 147 million. He said workplace and direct flows were positive, while advised and personal remained challenged, with work underway to enhance AI-enabled member engagement and improve the adviser experience. Management also noted margins were impacted by repricing initiatives, including reductions to MasterKey and Plum.
In Asset Management, Hartley said 87% of multi-asset funds outperformed benchmarks and that MLC MySuper Growth ranked top quartile over five years. The company delivered AUD 5 billion of net flows into multi-asset across managed accounts and diversified funds, offset by outflows in direct capabilities that Hartley said were predominantly due to institutional rebalancing in fixed income. Hartley said Alternatives had grown to AUD 4 billion since launch, managed accounts were above AUD 4 billion, and the private equity program progressed with the close of co-investment Fund IV in December 2025.
Free cash flow turns positive; leverage remains below 1x
Chalmers said the reduction in below-the-line cash spend translated into a significant improvement in free cash flow to +AUD 52 million, compared with -AUD 239 million in the prior period. He attributed the prior-period outflow to transformation and separation costs of AUD 100 million and remediation payments of AUD 102 million. For the first half, free cash flow also benefited from a AUD 51 million reduction in corporate balance sheet funded ORFR following the updated Prudential Standard SPS 114.
Senior leverage was 0.9x net debt to EBITDA at the half. Chalmers said FY2026 funding requirements included expected remediation funding of AUD 54 million and repayment of AUD 254 million subordinated loan notes prior to May 2026. The company expects closing FY2026 total leverage of around 1x, consistent with its capital aspirations for ongoing leverage at or below 1x from FY2027 onward.
Scheme update and FY2026 guidance changes
Management reiterated details of the previously announced Scheme Implementation Deed with CC Capital, offering AUD 4.80 per share, implying an equity value of approximately AUD 3.3 billion and a 57% premium to the undisturbed close on 11 December 2024. Hartley said the board unanimously recommends shareholders vote in favor, with implementation subject to approvals including APRA, FIRB, ACCC (noting approval has already been received), FCA, shareholder approval, and court approval, as well as the independent expert’s conclusion that the scheme is in shareholders’ best interests.
In response to a question, Chalmers said the scheme booklet was being finalized following ASIC and ASX review, and that the process also depended on feedback on CC Capital’s APRA application. He said there were no mechanisms in the deed to alter price, aside from provisions for a special dividend if the scheme does not become effective within 12 months (after 22 July 2026), subject to conditions including net debt remaining under AUD 500 million after payment.
Chalmers said the company updated FY2026 margin guidance for two segments:
- Master Trust margin guidance increased to 51.5–52.5 basis points (from 51–52), reflecting timing effects and delays to certain simplification initiatives that lower margin.
- Wrap margin guidance reduced to 27–28 basis points (from 27.5–28.5), reflecting timing impacts including slower white-label migrations to Expand and fee tiering effects amid market growth.
Cost guidance for FY2026 was unchanged, though Chalmers said reinvestment spend was expected to accelerate in the second half.
On longer-term cost targets, management said it still expects AUD 200 million of gross cost savings from Master Trust through to 2030, representing about half of overall expected gross cost savings over that period.
About Insignia Financial (ASX:IFL)
Insignia Financial Ltd. provides financial advice, platforms, and asset management services in Australia. The company offers financial services solutions on superannuation and investments to clients including investors, members, employers, and advisers. It also provides financial advisory, various financial products and services, and investment management services on behalf of institutional, retail, and direct clients. The company was formerly known as IOOF Holdings Ltd. and changed its name to Insignia Financial Ltd.
