MLC's Geoff Lloyd

The announcement from NAB chief executive Andrew Thorburn that ex-Perpetual head Geoff Lloyd will run the MLC division of the financial services giant positions the bank well for an initial public offering (IPO) next year, yet may not be enough to retain the services of the 1315 advisers under its licensees.

The appointment follows the announcement on May 2 that NAB will retreat from the wealth management business, currently operating under the MLC banner, and focus on its nabtrade and JBWere wealth offerings.

Since the announcement, no sale has come to fruition, and no indication has been given whether the licensees, including NAB Financial Planning (486 advisers), GWM (470 advisers), Apogee (139 advisers), Godfrey Pembroke (138 advisers) and Meritum Financial (82 advisers) will be divested as a group or individually.

Industry sources suggest that the most likely outcome is an IPO of advice, platform, superannuation and asset management businesses, bundled under the MLC banner, towards the end of 2019.

The bank has left every option on the table for the sale and made clear in a press release announcing Lloyd’s appointment that this remains the case.

“Separation is targeted by the end of the 2019 calendar year via public market options, including demerger and IPO, while maintaining flexibility to consider trade sale,” it reads; however, Lloyd’s track record in running Perpetual – a publicly listed company – strongly suggests that NAB’s first choice is to bundle the assets together in a public offering.

Lloyd, who resigned as chief executive of Perpetual in June, is known in the industry as an adviser advocate. Brendan Johnson, director or both GWM and Apogee, says Lloyd “understands financial planning and self-employed advice business models”, and has “a history of believing in advice and advisers”.

A pointed question is whether the advisers at the coalface will wait 18 months for their fates to be revealed. Ructions within the group were revealed when Professional Planner reported in May that Godfrey Pembroke was looking to split from the bank.

Stabilising the ship, then, will be Lloyd’s biggest and most immediate challenge when he takes the reigns on September 1. If the venture does go to IPO, he won’t have much time to restructure the various entities and will probably be limited in what he can tell advisers. Keeping them in the fold will be difficult if he can’t say who will own their licensees in 12 months.

Lloyd’s other challenge will be restoring faith in the MLC product. Strategic Insights reported that NAB/MLC investment platforms owned a 14.3 per cent market share at March 2018, down from 14.8 per cent in 2017 and 15.2 per cent in 2016. While they grew 4.1 per cent in 2018, institutional competitors BT, AMP and CBA all registered slightly higher growth during the period, while start-up Netwealth posted 48 per cent growth.

Lloyd’s mandate is a tough one, but he is experienced and well respected. Maintaining that good will, especially within the MLC community of advisers, will be key to his tenure.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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