Westpac has exited aligned dealer group financial advice, the final bank of the big four to do so following an announcement to the market on Tuesday.
Financial planning practices under BT Group licensees, Securitor and Magnitude, will either be assisted to move to self-licensing arrangements or other licensees.
A deal between Westpac and boutique licensee, Viridian Advisory, to transfer the control of up to 175 BT Financial Advice staff, which includes around 90 financial advisers, has been in the discussion for some time according to Glenn Calder, Viridian’s chief executive.
Calder said the firm has “working in concert” with BT and piloting their referral model for four years while negotiations on the larger deal “ramped up” since November last year.
“The spilt has been in place probably the last eight or nine months,” Calder told Professional Planner.
Westpac will retain the BT brand, however BT Financial Group will no longer exist as a stand-alone division following the announcement.
“The decision to exit the provision of personal advice by financial advisers under our license has not been taken lightly, and our priority is to ensure the smoothest possible transition for customers, advisers and support staff,” Westpac CEO, Brian Hartzer, said in a statement. Westpac held a call to inform the market of the news at noon on Tuesday.
BT highlighted that financial advisers have been gradually leaving the country’s major financial institutions’ licensees in favour of boutique and medium-sized licenses. BT’s adviser numbers have reduced significantly over the last four years – from 1192 in mid-2015 to 803 towards the end of last year.
In 2015 BTFG’s advice network comprised of 568 salaried and 624 aligned advisers; towards the end of last year it had 389 salaried and 414 aligned advisers.
Viridian’s Calder believes the bank’s motivation for abandoning wealth is part of a larger industry trend towards separation of product and advice.
“I think they can just see the industry changing, wanting to be at the forefront of it and recognising their core skill-set as [being] product manufacturing as opposed to the advice provision,” Calder says. “This probably represents a step up for them in terms of embracing the future state of the industry.”
Westpac has retained its private wealth business, grouping this division into its business banking division along with its platforms, investments and superannuation business while moving its insurance business into its consumer division.
Alastair Welsh, formerly Westpac’s commercial banking general manager, will lead the banking business on an acting basis while a global executive search is conducted to lead the division which includes its Panorama platform and BT Open Services division focused on providing services to licensees.
‘Shared DNA’
The emergence of Viridian as the new custodian for BT’s advice network will come as a shock to the industry.
Calder acknowledged this, but said their “shared DNA” meant the referral deal made sense.
“We’ve got a large and long BT and Westpac history so I guess that DNA put us in the front-running seat,” Calder said, “That would be a surprise to some, but that’s the basis for us being in the race.”
Viridian is an unlisted company which currently has six offices across four states and a “ten or twelve-year history”, according to Calder. Most of the employees are former Westpac staff who banded together to purchase the business from the bank.
“The nucleus of our company comes from Westpac,” he said. “All of our staff and some of our clients are shareholders and you need to be a connected party to have an ownership stake in Viridian.”
Calder said the pitch to bring BT advisers on board will begin next week, with collaboration front of mind.
“What we need to do is engage at the individual licensee level, so from next week onwards we’ll be looking to engage with individual practices through the BTGL existing network to say: ‘Here’s what Viridian offers’, he explained. “Then it’ll be a meeting of the minds as to our ultimate business evolution.”
Calder said they are looking for advisers who are product agnostic, which should influence the eventual make-up of the new expanded venture.
“People make their own decisions there in terms of the right licensing options so our license won’t be able to be subsidised by product like a lot of the other licensees of the past have been, so that will define who we are and probably the firms that we would attract,” Calder said.
