Several weeks before the “Kevin ’07” election, two colleagues and I were given the opportunity to host Kevin Rudd at a 12-person, four-hour boardroom dinner.
I took up the opportunity with delight and went about inviting key industry stakeholders. I ended up with an eclectic group of influencers from all walks of life. It was originally meant to be for financial services executives only, but we couldn’t find enough of them to join us – remarkable really.
This was a meeting not so much about politics – or political persuasions – as about being pragmatic and wanting to meet and influence a possible future Prime Minister of Australia.
As it turned out, Rudd was elected in a landslide just a few weeks later. Among the financial services execs who did make it were Brian Sherman – the former co-founder of EquitiLink, one of this country’s foremost financial entrepreneurs – and Steve Tucker, CEO of MLC and group executive of wealth for National Australia Bank.
That night, the discussion set the scene for what would become the Future of Financial Advice (FoFA) reforms. Rudd was told that radical overhaul of the financial services sector was required to better protect consumers in a mandated-super world. The gathering educated Rudd well on the key areas of concern before the conversation moved to other key issues, such as exporting financial services, becoming a regional hub, our relationship with Asia and even gay-marriage rights.
Six years later…
Today (Monday, March 4) I read an Australian Financial Review story on page 20 suggesting, not for the first time, the imminent demise of Steve Tucker and citing the perceived lacklustre performance of MLC/NAB Wealth relative to its peers – especially Westpac and CBA.
I note that neither of those organisations’ leaders in 2007 is still there and it is widely known NAB boss, Cameron Clyne, is announcing a restructure of his own later next week. I intend no slight on Lisa Grey, NAB Wealth’s mooted new boss, who is no doubt a first-rate executive and whom I remember from Plum/Vanguard days.
The real disasters of NAB are Homeside in the USA, and Clydesdale bank in the UK, both errors of past CEOs and boards. It seems a shame to me that Tucker is receiving anything but his due in an environment where MLC still made $556 million during 2012 in truly horrible conditions.
And it seems, anecdotally, that NAB/MLC is engaged to a far lesser extent than its competitors in making massive payments to financial planning firms to buy their loyalty. This practice has been likened to the agency development loans of the late 1980s and early 1990s – “loans” to insurance agents, which brought the industry to its knees and all but destroyed National Mutual when it was discovered that the payments bore little or no relationship to the value of business that the agents would write in future.
Tucker (right) was one of too few visionaries in the funds management, platforms and insurance space who, before the global financial crisis, believed that the world was going to change and that it needed to; and that increasing the number of consumers who bought advice would be good for everybody, but this would only happen if they trusted advisers.
From what I could tell, including in many private meetings with CEOs of the whole sector, Tucker was one of only a handful of guys not first and foremost concerned about his quarterly bonus. Instead, he consistently asked the question: What is the consumers’ best interest?
If our financial juggernauts can’t have some serious, gutsy integrity at the top, I reckon we are all in trouble.
OK, so the Aviva acquisition may not be setting the world on fire and NAB lost the AXA deal to AMP, but for a business purchased for $4.56 billion from Lend Lease in 2000, a $556-million return doesn’t seem so bad in the middle of a global financial crisis, all while refusing to let his people engage in some of the practices still going on at some of his competitors.
I know it is still too early for a eulogy, and the substance of the NAB shake-up is yet to be revealed. But I think it’s worth speaking up for one of the few genuine good guys, for whom vision and fairness are key attributes.
Hey GP65, if you do a little factual investigating you will see that the vast majority of fee income for the NAB/MLC/GPL advisers was comprised of trailing commissions, which were all allowed to keep rolling in when they went “fully fee for service”. Dare I say it, trails are probably still the majority of most advisers income streams in those organisations. MLC trails were nice and fat too, hence they made up the majority of that income. Happy to give credit where credit is due, but the “fully fee for service” tag implies impartiality, which is clearly a sham when you actively promote advisers to write truck loads of in-house product. So again, lets not try to re-write history…..
William, do a little factual investigating and you’ll see that he was one the early influencers and supports of many of the key elements of FOFA. He was not an architect of BOLR (but refined it with quality and compliance hurdles), and one of the first large national networks (NABFP) to go fully fee for service. But then it takes effort to recognise those that make themselves unpopular with the majority of advisers (which he was inside MLC) by doing these things first or close behind. Im not an employee or adviser inside NAB group but within a small ‘challenger’ competitor. Give credit where credit is due!
So we have Steve Tucker to thank for FOFA? I doubt that. Especially as under Tucker, NAB/MLC bought truck loads of loyalty from its advisers via ”buyer of last resort” contracts linked to use of in-house product. Talk about conflicted remuneration! Let’s try not to re-write history please…