Learn from mistakes and rebuild reputation: MLC

MLC Wealth chief Geoff Lloyd.

MLC Wealth chief Geoff Lloyd has begun putting his stamp on the business, outlining a new structure that commits to the loss-making planning unit and paves the way for a separation or sale by National Australia Bank.

Mr Lloyd, who left listed fund manager Perpetual last year and has led MLC for about six months, will focus his efforts on four areas including financial advice, investment platforms, retirement and investment solutions, and asset management.

But MLC has been embroiled in several issues, including charging advice fees where services weren’t provided, which were fleshed out in the Hayne royal commission.

NAB — which has set aside $800 million over five years for customer compensation and future provisions — is yet to fully pinpoint how much it will need to pay out in areas including its financial planner dealer groups.

Mr Lloyd is adamant, though, that the changes he is overseeing at MLC will set it up as a sustainable business over the medium and longer term.

“We need to change to grow and we need to grow significantly but at the same time we need to restore our relationships, we need to restore our confidence, restore our strategy,” he said yesterday.

“I want to make sure we fix those mistakes, that we learn from them and that we govern ourselves in a completely different mindset and structural way.” Mr Lloyd said changes sweeping the wealth and asset management sectors were opening up opportunities.

“This is the most disparate and bifurcated strategies of the competitive landscape that I’ve ever seen,” he said, adding that Westpac’s exit from financial planning created an “enormous opportunity” for MLC.

Mr Lloyd’s road map for MLC’s strategy includes its separation from parent NAB.

MLC had been intertwined in five different parts of the bank and flagged as a unit that will be divested, as three of the big banks wave the white flag in wealth management.

Mr Lloyd’s executive team will comprise 10 direct reports, eight of which are yet to be appointed.

He has poached Perpetual’s group marketing executive, Kylie Smith, to head up client, digital and marketing, while MLC risk boss and former QBE Insurance executive Mark Baxter will run governance, legal and compliance.

MLC is, however, also yet to replace head of private equity Alicia Gregory, who is headed to the Future Fund. The new structure will be backed with six of what MLC is calling “centres of excellence”, which seek to boost customer insights and engagement through data and digital services.

MLC houses 1200 financial planners including those that are employed by the bank and those that sit under its four dealer groups.

A memo on the MLC sent by Mr Lloyd to customers, and obtained by The Australian, said the division was “progressing well” towards its separation from NAB and that he would make further key appointments in coming months.

“Over the last year, it’s become very clear that the Australian wealth management industry needs to change fundamentally,” it said.

In its first quarter trading update last month NAB said a spin-off or trade sale of MLC would likely be delayed until 2020.

NAB’s results for the 12 months ending September 30 showed total cash earnings from wealth dropping to $250 million from $274m a year earlier.

This month, Westpac announced the sale of part of its financial planning business to boutique firm Viridian Advisory and wind down of the remaining advice operations.

ANZ Bank offloaded its planners and dealer groups to listed group IOOF last year and Commonwealth Bank has delayed a spin-off of unwanted businesses including financial advice.