NAB planners divided on FoFA change, union acts

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.”