IOOF and BT exited their relationship agreement from Thursday, with HUB24 now acting as the wealthy giant’s platform and administration and custody provider.

IOOF and HUB24 are also ready to collaborate on the development of a range of solutions, including private label super and investment products, with the IOOF entities being the responsible management entities.

The cost of the move from BT was previously estimated to cost IOOF between $30-$70 million and, combined with expected customer attrition, made the move unattractive.

But IOOF will now receive a one-time payment of $80 million before taxes, which takes into account the amounts due in recognition of its rights under the settlement.

The financial impact of closing the deal now includes a hit to IOOF's 2021 financial year earnings of $15 million before tax on $18.8 billion in funds under advice as of November 30.

After 2021 IOOF estimated that the full-year revenue impact would be significantly reduced due to outflows and lower prices.

IOOF CEO Renato Motta said the change is in line with his company's open architecture strategy, allowing customer choice.

"As IOOF embarks on its own platform simplification strategy, aligning with vendors that fit our open architecture approach will be key to continuing to provide choice to our customers," said Mr. Motta.

"The decision to change our vendor relationship now provides us with long-term security as we focus on effectively implementing our new platform strategy and growing shareholder returns."

The agreement with HUB24, which is subject to Trustee and Service Operator approval, will be a further extension of IOOF's existing arrangements with other platform providers as well as its own proprietary products under Project Evolve.

IOOF's managed account solution, MPS, is expected to be available for the 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 Motta.

“We continue to focus on our own Evolve platform; however, it is important that we continue to work with partners whose long-term business strategy and ability to provide choices align with our own.”

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting mainly on banking, financial services and wealth.

Prior to joining the team in 2018, Sarah worked in commercial media and produced stories for a current affairs program on public radio.

You can contact her at [email protected].