Keep your hands off BT Wrap, Westpac warned

SOME of Australia’s leading master trust and wrap researchers have given their qualified endorsement to Westpac’s acquisition of the BT Wrap as part of its buyout of the BT Financial Group last week.

But the same researchers have warned Westpac to “leave the wrap alone” if the bank is to achieve its ambition to become a leading player in the platform market.

Westpac group executive of wealth management David Clarke said last week the acquisition of BT was driven by the bank’s desire to add a market leading investment platform to its list of products.

BT’s wrap platform, with $6.5 billion under administration, is the fifth largest wrap account product in the country.

“We acquired Rothschild Australia Asset Management [in April] to obtain a rated asset management capability and access to the external financial adviser network. However, as we stated at the time, it did not address our need for a more functional and scalable administration platform for both the retail market and for corporate superannuation,” Clarke says.

It is understood Westpac had made advances towards some of Australia’s other leading platform providers, including the Norwich Union owned Navigator, before the opportunity to purchase BT arose.

Researcher Leo Wassercug, of Look Research, says Westpac’s acquisition of the BT Wrap would put it in a strong position against some of it major competitors.

But Wassercug says Westpac’s success as a leading platform provider will be judged on its ability to incorporate the BT Wrap into the bank’s wealth management business without disrupting what is already a successful product.

“In platform terms, Westpac should become a powerful competitor in the market, but that will be contingent on how they handle the transition [of the BT Wrap] and how that is perceived in the market,” Wassercug says.

Tom Collins, of the Tom Collins Consultancy, says Westpac's push into the platform market would be hampered if it did not keep investing in the BT Wrap.

Up to 90 per cent of the flows into BT's wrap are believed to come from financial planning groups who badge the BT Wrap with their own brand. Collins says BT's contracts with these groups will eventually come up for renewal, meaning Westpac would have to ensure BT's wrap remained a competitive offering.

“Financial advisers will continue to demand more services from their platforms,” Collins says.

“But if Westpac understand what they have bought, and they are willing to essentially leave the wrap alone, they could do well.”