Westpac is selling its personal financial advice business as Australia’s second-biggest bank exits the scandal-hit sector.
Westpac said on Tuesday it will absorb the private wealth, investments and superannuation capabilities of its BT Financial unit into its business bank, and sell its personal advice assets to Viridian Advisory for an undisclosed amount.
The move follows rival ANZ’s sale of its financial planning groups to IOOF and comes after the financial services royal commission heard instances of fees for no service, excessive fees and conflicts of interest in the industry.
“The decision to exit the provision of personal financial advice by financial advisers under our licence has not been taken lightly,” Westpac chief executive Brian Hartzer said.
The changes will be complete by June 30 and result in one-off costs of $250 million to $300 million across two years, but earnings-per-share will improve in the 2020 financial year due to the exit from a high cost, loss-making business.
Commonwealth Bank and NAB are also looking over their options for spinning off wealth businesses.
Viridian will offer employment to as many as 175 salaried advisers and other staff, Westpac said, while advisers under the Securitor and Magnitude brands will have options including self-licensing or moving elsewhere – possibly to Viridian.
“We’re realigning our capabilities into the lines of business where it makes most sense based on customer needs,” Mr Hartzer said.
“Most customers don’t differentiate between banking and wealth products; they want help buying their home, paying their bills, planning for retirement, or protecting the things that matter most to them.”
Insurance will be moved into Westpac’s consumer bank, which will be led by current business bank chief executive David Lindberg.
Consumer bank boss George Frazis, the former St George chief executive touted by some as a possible successor to Mr Hartzer, will leave the bank.
Westpac said it expects to have remediated all customers of salaried advisers in relation to ongoing advice fees by the fourth quarter of 2019, and that it is “continuing to work through its remediation approach” for authorised representatives.