Ann: Investor presentation - IOOF FY 2018 results, page-7

Thanks Transversal I'll add my response to your comments as I try to better understand the business:

1) A proposal to abolish all grandfathered commissions.

Conference call stated no material impact on IOOF

2) A proposal to cap all account fees at 3% of the relevant funds.

Just a proposal but would need to consider all direct and indirect fees for all industry players. Arguably this could give an advantage to the largest and leanest players and could possibly encourage further industry consolidation.

3) A threat of abolishing the vertical integration model, potentially forcing a separation of the advice business.

A potential issue partially countered by IOOF's "Open Architecture". The risk here seems to me to be getting caught up in the RC's response to the misdeeds of the bank's wealth management arms. Politically it would be heavy handed and go against the 30 year tide of minimising regulation. Given how resistant the pollies were to setting up a RC in the first instance I think it would be highly unlikely they would push such a reform through. All the same this remains possible.

4) A threat of a new shareholder class action in relation to the facts occurred up to 2014.

Yes, a threat that may arise but quantifying its impact and timing is extremely difficult. Not sure that it would be likely to have a material impact.

5) An aggressive cut in platform fees from a direct competitor.

Fees have been cut by competitors aggressively for the best part of a decade. IOOF has been able to maintain net margins in spite of constantly eroding gross margins over the long term.

6) Ongoing investigation from the Royal Commission into the Superannuation industry.

No smoking guns as yet for IOOF and management seemed pretty relaxed around this. To me this is a major risk to IOOF but only a small probability of occurring. I would hope that the scandal a year or two ago plus the RC to date would have flushed out any major issues by now.


Cheers,
LB