Westpac quits financial advice in deal with Viridian
Westpac is quitting the financial advice segment and overhauling its management structure in a change that will result in two of its most senior executives leaving the bank.
The bank's BT Financial Group will be rolled into Westpac's consumer banking division, with current consumer bank chief George Frazis and BT chief Brad Cooper set to leave the company.
Following a review of its challenged advice business, Westpac on Tuesday said it would no longer provide advice to customers through its salaried planners working for BT Financial Group, or through authorised representatives it owns.
Financial advice was one of the biggest problem areas unearthed during the royal commission, with commissioner Kenneth Hayne recommending a ban on “grandfathered” commissions, tighter curbs on fees charged by advisers and a new disciplinary regime for the sector.
Banks face hefty compensation bills and compliance costs, and Westpac revealed last year it was reconsidering staying in advice. It will continue to provide life insurance and a wealth management platform, Panorama.
With BT to be rolled into the consumer division, Mr Frazis is leaving the bank in June "to pursue other leadership opportunities", and current business banking head David Lindberg will run consumer banking, Westpac's biggest division. Alastair Welsh will act as chief executive of the business banking division.
The bank will sell the business to Viridian, which is set to offer employment to about 175 BT salaried advisers, and other management and support staff. Westpac currently has about 900 full-time staff in financial advice, including support staff.
“We are committed to supporting our customers’ insurance, investment and superannuation needs as part of our service strategy. The changes we’re announcing today are about focusing our investment where we have genuine competitive advantage and growth opportunities,” chief executive Brian Hartzer said.
Westpac said one-off costs from the sale were expected to be between $250 million and $300 million, spread across fiscal 2019 and 2020. The changes were expected to be earnings per share positive in 2020.
Westpac's shares were 0.87 per cent higher at $26.75 in early trading.