National Australia Bank’s NAB Wealth and MLC have defended an internal restructure of the bank’s overarching financial planning strategy that has drawn criticism from the Finance Sector Union (FSU).
The union says its members have expressed a number of concerns, with most centering on planned alterations to the remuneration model for financial planners.
In November 2012, NAB put a proposal to its financial planners, through a consultative committee, to alter their payment structures as part of a shift to scaled advice.
Some media reports have claimed that senior NAB financial planners could see a 50 per cent cut in revenue within a couple of months although these also factored in cuts to commission-based income, slowing investment markets and higher consumer expectations.
The union says discussions resulted in some changes to the original proposal, with NAB then advising planners that it would be implemented before the year’s end. Due to difficulties – including data issues – this has now been delayed to February 2012.
New customer service model
MLC advice and marketing executive general manager Richard Nunn told Professional Planner Online that the changes stemmed from a new customer service model being rolled out to NAB Financial Planning.
“Under the new model, clients who don’t have an active advice relationship with a NAB FP planner, or who have less complex advice needs, will be serviced by phone-based advisers,” he said.
“This will allow our NAB financial planners to focus on clients with more complex needs, or who are seeking a full-service advice relationship.”
NAB/MLC insists that its latest move was undertaken to keep it ahead of key legislative changes such as the Future of Financial Advice (FoFA) reforms and in step with evolving customer behaviour.
“Every customer is different and their needs are different,” said Nunn. “Our new scaled model of customer support means the cost to customers better reflects the service they want.
“For example, some customers want advice at the point in time that they’re setting up their financial arrangements. Other customers want an ongoing relationship and more active management of their portfolio.”
However, Nunn contends that the company has been through an extensive consultation process with its advisers to work through how it aligns business model with the new customer approach.
“This process resulted in some good feedback which helped to influence our new model,” he said.
“While the changes to our business model may result in change to some advisers’ revenue levels, for the majority of our advisers who are proactive and have strong customer relationships, this will be beneficial. We also implemented a long transition period to allow advisers time to adjust to the new model.”
Union concerns
FSU members have expressed a number of concerns with the changes including:
• Loss of future revenue
• More difficult to qualify
• Damage to established businesses
• Timing – attempt to rush the changes through before Christmas
• Data error issues – inaccurate list of customers
“Members are also telling us they feel that NAB isn’t paying fairly by trying to change the terms of the enterprise agreement through consultation,” said the FSU in a statement.
“This is a matter for renegotiation through agreement negotiations later this year.”
The union says planners have signed an authority notifying NAB that they want their union representing them on this matter.
“But the reality is we’re much more likely to succeed if we work together and have widespread support,” continued the FSU statement.
“Without it, NAB will argue that the majority of planners have accepted the changes.”
Tread carefully Financial Planners, you’re all being judged. This is not about product providers, this is about greedy Financial Planners who STILL want to get paid a trail commission for doing ABSOLUTELY NOTHING. GOOD ON NAB for FINALLY changing their revenue structure with their Financial Planners.
Financial Planners should be focusing on how they are going to show value to their clients, not about how much trail commission they are going to lose!!
Phone based advice will work well for clients who are not in the position to pay for or even need complex advice, it is currently being done to good success in other businesses.
Advisers who are counting on products for their support should NOT be advisers, go do another profession, maybe selling cars! Advisers should be focused on showing clients value through the service and ADVICE they can provide. Focusing on products/product providers is OLD world, wake up to the new world!
WAKE UP PRINCESSES!!!
So the ALP and the unions drive legislative change that has consequences that the unions are now not happy with. Genius.
MLC Using phone based advisers for any product, would quickly become unattractive to all advisers and support for your product will cease. I expect MLC to suffer severely from this policy.
Opt out or FDS opt outs; will cause adviser less clients in products they’re not capable of handling. (Wraps)
For wraps and adviser driven distribution to occur, opt outs need to get a new adviser or find another product.
Advisers are counting on products for their support.
Products that do not show their support for the profession will stop being supported by the profession, like I expect for MLC.
Tread carefully product providers, your all being judged.