Inside the Dealers 31/08 – Westpac planners find carats at the end of the stick

Westpac is getting very serious about its expanding its financial planning business — and it’s willing to put its money where its mouth is, as Stuart Engel reports

Westpac's next national financial planning conference will be held in the exotic Middle Eastern city of Dubai.

Nothing unusual about that. Financial planners are often whisked away to the four corners of the earth by dealer groups or fund managers as a reward for their loyalty.

But a bank? In the past you would be lucky to get a free trip to a bank's head office for the annual general meeting.

But banks are waking up to the realities of the financial planning business. Westpac is now serious about keeping their best planners and attracting the big hitters from outside the group.

And this means offering incentives to match other dealer groups vying for their most talented planners, according to head of the dealer group Brett Himbury.

"If we take two plane loads full of planners to Dubai next year, I will be a happy man," Himbury says.

To get on the plane, Westpac advisers not only have to meet production criteria, but also need a clean compliance record, based on a two strikes and out criteria.

Compliance, Himbury explains, is the cornerstone to the rebuilding of Westpac's financial planning business.

Just before Christmas last year, Westpac was hit with a bombshell from the Australian Securities and Investments Commission (ASIC). The investment watchdog was targeting a number of financial planning groups it felt were lax on compliance. Westpac gave an enforceable undertaking to ASIC late last year to get its compliance process up to scratch.

Himbury says the ASIC action was a threat to the business when it issued the warning, but the revamping of compliance procedures ultimately made a stronger business.

"Perversely, it (the ASIC undertaking) was a catalyst to make our compliance system up there with the best in the industry and, in some ways, lead the industry," he says.

The compliance team was shaken up and high profile technical manager Nick Ingram was handed the job of managing the all-important training and compliance operations.

Compliance may be the cornerstone to the rebuilding of Westpac Financial Planning, but the real building blocks to the business are the career opportunities and pay packets being offered to advisers.

Many financial planning groups view bank-based groups such as Westpac as the ideal breeding ground from which to poach advisers. This irks Himbury, so he has put together a remuneration system designed to retain and lure the industry's finest.

Himbury acknowledges that competition for high calibre people is red hot.

"The difference is not in the strategy itself but in how we execute the strategy," he says.

Westpac advisers are now paid what is known as a "career bonus", which is essentially a trailing commission on top of a separate salary and bonus system.

The really top producers can also earn option packages in Westpac Banking Corporation. Himbury says Westpac planners can potentially be some of the biggest earners in the industry.

However, he insists he is not simply throwing a large wad of money at the planners to make them stay. On top of the new remuneration system, the structure and direction of the group reflects the new dynamic of the group.

Westpac's financial planning business has traditionally covered the entire length and breadth of the bank's five million customers. Under the strategy outlined to the group a few months ago, Westpac will refine the focus further by setting up specialist planning divisions for small business and the rich.

Just over half of the group's 550 advisers will continue to focus on the bank's core customer base from middle Australia. But two other segments have been established - business customers and priority/ private bank customers.

The 25 private bank planners deal with the financial planning needs of Westpac customers with more than $1 million to invest while the 100 priority planners look after clients with more than $250,000.

Westpac's renewed focus on the small business sector is a recognition by the bank that it needs to wrestle part of the market away from competitors, most notably the National. Planners will work alongside the bank's business relationship managers to advise on gearing, protection and business superannuation issues.

With the new operational system up and running, Himbury says the group is now looking to grow its adviser base from the current 550 to about 640 by June next year.

"The bank's strategy is to double the value of existing customers by 2003," he says.

"To meet that objective, we will need to expand our business. We have only seen 10 per cent of Westpac's five million customers, so there is plenty of scope for growth."

What is a portfolio planner?

Westpac Financial Planning's 600 advisers will sit in front of 190,000 Westpac banking customers this financial year.

That's more than 300 new clients per adviser, about double the amount the average planner would see a year, let alone meet for the first time.

With such a huge emphasis on getting planners in front of customers, it would be easy to undermine the service provided to existing financial planning clients.

Enter Westpac Portfolio Planners. These 26 planners have a mission to ensure all customers seeking ongoing service have their needs met. This typically means looking after clients with investment portfolios of about $200,000.

Not that Westpac's army of advisers do not provide ongoing service themselves, however some advisers are better suited to initial consultations and some are better suited to ongoing service, explains head of Westpac Financial Planning, Brett Himbury.

"The Portfolio Partners are specialist ongoing service providers," Himbury says.

"They do not so much back-up the advisers seeing new clients but provide specialist services to existing financial planning clients."

The portfolio planning division is still in its early days, however Himbury says the group is looking to bolster the service over the next few years.

Vital statistics

Westpac Financial Services

Advisers: 550

Funds under administration: $8 billion

Ownership: Westpac Banking Corporation

Founded: 1988

Key figures: Brett Himbury (financial planning general manager); John O'Brien (national manager, financial planning); Steve Watts (head of consumer advice); Peter Jewett (head of business advice)

Position in Money Management Top 100: 4

Master trust: Westpac Personal Portfolio Service

Research: Internal and van Eyk Research

Next conference: Dubai