Mergers and acquisitions: unexpectedly branded
In the space of just 18 months, the Australian financial services industry has been subjected to one of its most significant periods of consolidation, yet the Australian Competition and Consumer Commission (ACCC) has remained impassive.
Westpac has taken St George, IOOF and Australian Wealth Management have merged and then taken Skandia, NAB/MLC has taken Aviva Australia and, now, AMP has emerged with a bid for AXA Asia Pacific.
While some might argue this activity has not significantly altered the competitive dynamic of the nation’s financial services industry, it has certainly reduced the diversity of the underlying options available to financial planners.
Moreover, it is arguable that the mergers and acquisitions have reduced the sourcing of the products they might ultimately recommend to clients.
What needs to be closely examined by the ACCC is not so much the overarching ownership of particular companies, but how this filters down into the operations of their various market segments, subsidiaries and sub-brands.
A combined AMP/AXA Asia Pacific will represent a substantial force in the Australian financial services industry, particularly where wealth management and insurance is concerned. Indeed, such a combined entity might arguably act as a counterbalance to the likes of Westpac/St George and NAB/MLC/Aviva.
But what these mergers and acquisitions have also served to do is change the commercial and philosophical ecosystems of individual financial planners. People who consciously sought to avoid working under a major bank brand have found themselves doing so. Clearly there are planners working within the AXA framework who will be uncomfortable working under the AMP umbrella.
Is this a bad thing? Will it simply give rise to more independents and more boutiques?
These are questions that can and should be examined by the ACCC.
After examining the situation it may determine that it is not justified in acting. However, it owes it to the broader industry and consumers to ensure that the right questions are actually asked.
— Mike Taylor
AUTHOR
Mike Taylor
Recommended for you
In this week’s episode of Relative Return Unplugged, AMP chief economist Shane Oliver joins the show to unravel the web of tariffs that US President Donald Trump launched on trading partners and take a look at the way global economies are likely to be impacted.
In this episode of Relative Return, host Laura Dew is joined by Andrew Lockhart, managing partner at Metrics Credit Partners, to discuss the attraction of real estate debt and why it can be a compelling option for portfolio diversification.
In this week’s episode of Relative Return Unplugged, AMP’s chief economist, Shane Oliver, joins us to break down Labor’s budget, focusing on its re-election strategy and cost-of-living support, and cautioning about the long-term impact of structural deficits, increased government spending, and potential risks to productivity growth.
In this episode of Relative Return, host Laura Dew chats with Mark Barnes, head of investment research, and Catherine Yoshimoto, director of product management, from FTSE Russell about markets in Donald Trump's second presidency and how US small caps are faring compared to their large-caps counterpart.
