Mergers signal changing of the guard

National Australia and the Commonwealth will soon own one-fifth of the financial planning industry.

National Australia and the Commonwealth will soon own one-fifth of the financial planning industry.

It’s a seachange for the industry which has been dominated for the past two decades by the AMP group, which has been the undisputed king of distribution in Australia.

But that was before the Commonwealth Bank and National Australia Bank went on a spending spree.

The Money Management Top 100 dealer group survey conducted by KPI Research in November 1999 reveals that AMP owns a distribution network with 1834 advisers. Up until two months ago, Count Wealth Accountants with 1000 planners was next in line. While the Commonwealth ranked third, National Australia’s relatively paltry 250 planners was way behind at number 13. What a difference a few months make.

The Commonwealth’s purchase of Colonial will increase its distribution force to 1548, not including Ipac’s 32 advisers. (Ipac is 50 per cent owned by the bank). And then there’s NAB’s $4.56 billion purchase of MLC.

Members of the MLC financial planning family include Lend Lease Financial Planning, Lend Lease Corporate Programs, MLC Financial Planning, Garvan Financial Planning, Godfrey Pembroke and MLC Private Clients. Add those advisers together with the National’s 250 planners and the National will have a distribution force of more than 1200 planners.

MLC and Colonial advisers have reacted cautiously to the news of their new parents. The feelings of Colonial’s 400 advisers are now known. As reported in an earlier edition of Money management, they hold grave concerns that their interests will be overlooked in the merger.

Over the past two years, they have had to bear the brunt of a series of takeovers and acquisitions, involving the State Bank, Legal & General and Prudential.

President of the Colonial Advisers’ Association of Australia, Kevin Owen says the previous takeovers had cost advisers dearly — administratively and financially. Colonial has agreed to address the issues but won’t make any further commitments to advisers while the process of due diligence is still being completed. An announcement is due on 15 May.

MLC’s advisers are a mix of salaried employees and independent small business owners. MLC has an exemplary record as an employer.

The Lend Lease Foundation, for example, offers employees funds for education, health checks, travel and personal development programs. The Prosper Program offers employees an annual allocation to spend on things like internet access or computer hardware to enable telecommuting. MLC also allocates company shares on an annual basis based on the profit of the company. Extra shares are awarded as performance bonuses.

There are rumblings amongst salaried advisers that staff benefits like these are unlikely to survive in a bank climate.

MLC’s contract advisers also have concerns and will be having discussions with the Colonial Advisers’ Association to see what they can learn from their experience.

MLC’s Steve Tucker …

TABLE 1.

The New Top Five

No. of Avisers

1. AMP/GIO 1834

2. CBA/Colonial (excluding Ipac) 1548

3. NAB/MLC 1248

4. Count Wealth Accountants 1000

5. Mercantile Mutual 647

Total 6,269

Total Advisers in Australia 15,000

Source: KPI Research

CBA/Colonial Advisers

Commonwealth Personal Bankers 613

Commonwealth Investment Consultants 189

Commonwealth Financial Planning 13

Colonial Financial Services 400

Colonial Financial Planning 70

Financial Wisdom 263

IPAC (50 per cent) 32

Total 1548 (without Ipac)

NAB/MLC Advisers

LendLease Financial Planning 300

LendLease Corporate Programs 8

MLC Financial Planning 290

Garvan Financial Planning 219

Godfrey Pembroke 132

MLC Private Clients 50

NAB Financial Planning 249

Total 1248

Source: KPI Research