Powered by MOMENTUM MEDIA
subscribe to our newsletter

Westpac sells ‘loss-making’ financial advice business

The major bank has announced a raft of changes to its wealth strategy, including the sale of its “high-cost, loss-making” personal financial advice business to Viridian Advisory.

Westpac has announced that it will no longer be providing face-to-face financial advice to customers through its salaried planners working for BT Financial Group or through authorised representatives, instead selling personal financial advice assets to Viridian Advisory.

The exit will see Viridian Advisory offer employment to around 175 BT Financial salaried advisers and other management and support staff. The firm will also commence supporting ongoing advice customers who consent to the transition from the anticipated completion date of 30 June 2019.

The major bank, which has about 900 staff in financial advice, will instead move to a referral model for financial advice, using a panel of advisers or advisory firms.

According to Westpac’s disclosure to the Australian Securities Exchange (ASX), the exit is expected to result in:

Advertisement
Advertisement
  • removing the cash earnings loss from the advice business ($53 million in FY18 excluding remediation costs); and
  • $20 million (pre-tax) of productivity savings from operating one less business division.

Effective from 1 April, BT Financial’s insurance business will be rolled into Westpac’s consumer division, while the private wealth, platforms and investments, and superannuation businesses will move into its expanded business division.

Westpac CEO Brian Hartzer explained: “We’re realigning our capabilities into the lines of business where it makes most sense based on customer needs. Most customers don’t differentiate between banking and wealth products; they want help buying their home, paying their bills, planning for retirement, or protecting the things that matter most to them. They expect professional service that meets their financial needs.

He continued: “Moving private wealth into the business division recognises that many of our high-net-worth customers have their own businesses or work for many of the companies we bank.

“Similarly, superannuation – including corporate superannuation and support for SMSFs – is strongly linked to our business division.”

The bank has also revealed changes to its management structure, which will see Westpac consumer division chief George Frazis leave the bank in June to “pursue other leadership opportunities”. Mr Frazis will be replaced by current business division chief David Lindberg.

PROMOTED CONTENT


Westpac general manager of commercial banking Alastair Welsh has been appointed to lead the business division on an acting basis until a permanent replacement for Mr Lindberg is found.

BT Financial chief Brad Cooper will also depart the group upon the completion of the restructure.

The changes are expected to be earnings-per-share positive in 2020 due to exiting a “high-cost, loss-making business”, according to Westpac’s ASX disclosure.

Westpac said it will absorb one-off impacts from the sale and restructure over FY19 and FY20, with initial estimates including one-off costs of between $250 million and $300 million.

The value of the transaction will depend on the size of the BT business that transitions to Viridian Advisory, the bank said. 

Westpac additionally reported being “on track” to completing its customer remediation programs in relation to the charge of ongoing personal financial advice fees by its salaried BT advisers by the fourth quarter of 2019.

As part of the changes, responsibility for BT remediation programs will move to Westpac COO Gary Thursby.

Westpac said the divisional changes will not be reflected in its first-half financial results for FY19.

The major bank’s share price rose nearly 1 per cent to $26.74 in early trade following the announcement.

[Related: AMP ‘surrenders’ fees-for-no-service documents]

Westpac sells ‘loss-making’ financial advice business
Westpac
mortgagebusiness

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Tickets are on sale now. Work smarter, not harder, this year.

Reporter

If you have any news, ideas or enquiries for Mortgage Business - please contact This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

New lending commitments for owner-occupiers fell by 2.5 per cent in June, the largest monthly drop-off in around a year. ...

Non-bank lender TechLend has gained $50 million in funding from a Silicon Valley venture fund, with plans to turbocharge the growth of its b...

The RBA has announced its August rate decision as ongoing lockdowns dampen speculation about imminent rate rises. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.