The end of the ‘great banking adventure into wealth management’

With the prospect of a ‘great banking adventure in wealth management’ reaching its end, everyone in the industry is now carefully watching what’s next, with new reports on companies changing hands, being swallowed up by stronger rivals or facing a shut-down, emerging almost on a weekly basis.   

On top of that, a number of key wealth management firms from both sides of the spectrum have continued to review their strategies, in a hope to better prepare themselves for the coming change.

This was the case with a recently-announced strategy by AMP, dubbed by independent group Synchron as a “return to dark ages”, which aimed to see “fewer but more productive advisers”.

AMP still holds the title of one of the biggest groups in the wealth management sector, with AMP Financial Planning consecutively sitting on top of TOP 100 Financial Planning Groups’ list over the last few years, an annual ranking run by Money Management.

The data from July, 2018, showed that AMP FP had over 1,400 financial advisers, significantly larger than the remaining three groups which also operate under AMP’s umbrella. These groups included Charter Financial Planning, Hillross Financial Services and Ipac Securities which, respectively, had 684, 304 and 139 planners, as of last year.

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However, according to this year’s Australian Securities and Investment Commission’s (ASIC’s) Financial Adviser Register (FAR) data, all AMP groups saw declines in number of its advisers over the 12 months, with AMP FP suffering the biggest loss of 145 to 1,272 advisers.

Although, at the time of writing this, the fate of these groups remain unknown, there is a high chance that AMP might soon be losing its position as a leader, given the rapid expansion of some of its competitors.

While AMP was busy over the last few months explaining its business in front of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, IOOF continued to grow its business and completed the acquisition of Australia and New Zealand Banking Group’s (ANZ) four aligned groups: RI Advice, Millennium 3, Financial Services Partners (FSP) and Elders Financial Planning, known together as ANZ Wealth Management (ANZWM).

The acquisition represented an addition of around 650 financial planners as of July, 2019.

On the other hand, IOOF began to reorganise internally its wealth management business much earlier, with a number of companies being either merged or shut down. This included My Adviser and Plan B Wealth Management which were both closed down while Western Pacific Financial Group and Wealth Managers were merged with Consultum and Bridges Financial Services, respectively.

As a result, IOOF had five financial planning groups operating under its auspices with a total number of close to 990 planners which in conjunction with the ex-ANZ-groups brings the current  total number of advisers for the group to slightly over 1,600.

BANKS DEPART WEALTH MANAGEMENT

As IOOF and AMP are still in the race, the banks continued their departure from the wealth management business.

In March, Westpac confirmed its exit from the financial advice business, in a move that saw Viridian Advisory snap up Westpac’s BT Financial Advice business. The bank reset its wealth strategy and decided to exit the provision of personal financial advice via financial advisers. Following this, Westpac Banking Corporation exited the provision of personal financial advice by Westpac salaried financial advisers in June while authorised representatives currently authorised under the Securitor Financial Group and Magnitude Group license are expected to transition off those licenses by 30 September.

In July last year the three groups jointly had over 930 financial planners. This included 293 planners at Securitor, and 466 and 171, respectively, at BT Financial Advice/Westpac Banking Corporation and Magnitude Group.

Following the Westpac announcements, the Commonwealth Bank announced in June the sale of one of its key wealth management assets, Count Financial, to CountPlus for $2.5 million. The transaction took place almost a decade after the Count business was first sold to the Commonwealth Bank by its founder, Barry Lambert, for a much higher consideration of $343 million.

In August, CountPlus announced that, as a result of the acquisition, it would gain close to 350 advisers from Count Financial.

In 2015, Commonwealth Bank transferred all planners from its BW Financial Advice to Financial Wisdom, a group that had over 300 planners as of July this year. However, more recently the bank announced plans to shut down Financial Wisdom in 2020, sending a clear message to advisers that its intention was to exit its wealth management and mortgage broking businesses “over time”.

As of now, this will leave the bank with just one group, Commonwealth FP, which is one of the few groups that can boast having over 500 advisers on board.

OTHER PLAYERS

The last few months have also proved that it wasn’t just banks and the biggest institutional players that were hit by the disruption in the industry and that the departure from wealth management as some companies, began as early as a few years back.

In 2015, Suncorp was the first biggest institutional player that said it would exit from the financial planning business, a move which affected then the jobs of around 170 self-employed, aligned advisers, at its two networks, Guardian Advice and Suncorp Financial Planning.

Another company that followed in its footsteps in April, 2019, was Aon after announcing the sale of its financial advice arm, Aon Hewitt Financial Advice which still had over 180 advisers in 2018.

In March, another publicly-listed wealth management firm, Yellow Brick Road (YBR), which in 2018 had 80 planners, announced a strategic review of its business in order to remain competitive and announced plans to focus on its mortgage arm. In July the company had completed the exit of another wealth business as it confirmed the sale of its 50 per cent interest in publicly-listed institutionally-focused active fixed income manager, Smarter Money Investment.