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BFCSA: Financial planners resisting Westpac’s sell-off to Viridian

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Financial planners resisting Westpac’s sell-off to Viridian

The Australian 12:00am April 1, 2019

Joyce Moullakis


EXCLUSIVE  Westpac is facing headwinds as it looks to offload some of its loss-making financial planning unit to boutique Viridian Advisory, and ultimately exit financial advice.

The Australian understands the transaction is facing resistance from planners, including a group of up to 15 with the largest customer books who will opt not to join Viridian.

Westpac’s most senior financial planners, known as the partnership group because they also share revenue with the bank, must decide in coming days whether to accept Viridian offers and a separate incentive payment from Westpac to assist in buying shares in the boutique.

Other planners and support staff that are part of the 175 employees earmarked to transition to Viridian are yet to receive their ­offers.

Sources said those who were offered positions deemed by Westpac to be comparable to their current roles would not be eligible for redundancy payments. The Finance Sector Union is said to be taking an active interest in the negotiations.

A bank spokesman declined to comment on the specifics of the transaction, but said: “Westpac is working closely with financial planners and support staff around its exit of financial advice and to ensure as smooth a transition as possible for staff and customers.”

Salaried advisers that opt to switch to Viridian will transition by June 30, while planning practices under Westpac’s dealer groups will have until September 30 to find a new home, including Viridian.

Westpac has 803 advisers.

Westpac’s exit from financial advice and its dealer groups will touch tens of thousands of planning customers, who will need to decide whether to stick with their adviser after the separation or reassess their service altogether.

Westpac chief executive Brian Hartzer has said the planning exit would allow the bank to focus on areas where it has a “competitive advantage”, including insurance and investment platforms.

Several industry observers are, however, questioning how Viridian has pitched itself in the advice market. The firm has a division that runs its own Separately Managed Accounts, a portfolio of assets managed by the firm in a unit called Infinity Asset Management.

While Viridian does not compel its advisers to recommend its SMA strategy, the issue is one of perception and disclosure.

Westpac outlined initial estimates of one-off costs of $250 million to $300m for its advice wind-down, and said proceeds from the sale would depend on the size of the business that transitions to Viridian.

The decision to retreat from financial advice also prompted a restructure of Westpac’s BT unit, seeing the management of the division’s remaining businesses shift to the consumer and business banks.

The other large banks are also stepping back from planning, following a string of scandals that were fleshed out at the Hayne royal commission. They included charging customers advice fees where no services were provided and levying dead people.

Westpac this month told investors interim cash earnings would be hit by about $260m due to provisions arising from further work on its customer remediation programs. That amount doesn’t include repayments to customers that will be made following a review of planners under the dealer groups.

Last year, ANZ sold its planning operations and dealer groups to wealth group IOOF, while Commonwealth and NAB are considering separating or selling their advice divisions.

Last week, NAB’s MLC Wealth division outlined a new strategy under CEO Geoff Lloyd. That included reviewing the footprint of its loss-making financial planning division, which includes salaried advisers and those under its dealer groups.

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