Westpac advisers are on the move

A handful of Westpac’s large practices under its dealer groups have decided to seek their own ­licence

The shifting sands in the nation’s financial advice sector are seeing Westpac employees and planning practices quickly disperse.

This column understands that many Westpac financial planners and practices that are shunning a deal with boutique Viridian are soon to pop up at other firms.

Small groups of salaried planners are headed for firms such as Shaw and Partners and Centrepoint Alliance.

A handful of Westpac’s large practices under its dealer groups have decided to seek their own ­licence, and others are said to be on the way to new homes at firms such as Fortnum Private Wealth, Paragem and Centrepoint.

TAL-owned Affinia is also talking to several Westpac groups that may join its ranks.

The upheaval comes after Westpac announced a deal in March that would see 175 of its planners and support staff tar­geted to go to Viridian as part of the bank’s broader exit from ­financial advice.

That was from a total of 389 salaried planners, while the 414 sitting under its Securitor and Magnitude groups were told to find a new home, which may ­include Viridian.

Westpac’s decision to exit the loss-making business sees tens of thousands of planning customers stranded while their adviser or practice finds a new home.

Given the unrest, the deal with Viridian is also still tracking below target in terms of staff, which ­increases the number of redundancies Westpac will pay out.

A bank source put the number of planners and support staff going to Viridian at 140, and increasing, while others close to the deal say the figure is much lower.

It is also unclear where Westpac is up to on its plan to set up a panel of planning groups and ­advisers to refer its customers to, as industry sources suggested the referral arrangement so far ­appeared to only include Viridian.

Westpac chief Brian Hartzer previously said he expected the move to exit financial advice to be earnings-per-share accretive in 2020, excluding remediation costs, after the division was removed from the bank.

Interestingly, Mike Wright, who fronted the royal commission for Westpac last year when he was head of financial advice, is himself a potential victim of the Viridian deal.

Sources said he may be re­deployed within the bank, but should that not work out then the broader Hayne royal commission’s death by a thousand cuts tally would increase.

The Viridian transaction has caused angst as the targeted ad­visers face the prospect of moving to a much smaller group.

Viridian’s latest accounts, lodged with the corporate regulator, show the firm posted a profit of $4.4 million in the 12 months to June 30, 2018. That was achieved on revenue of $18.9m and the group increased its bank debt pile to $8.1m.

The accounts mention acquisitions of other planning firms ­including Zest Wealth Advisers, Catalyst Financial and Cornerstone Super.

The Viridian deal is just the latest in the upheaval confronting the advice sector.

The industry is in a state of flux after banks waved the white flag and the royal commission made a raft of recommendations seeking to rid the industry of rogues.

After all the scandals. it is clear the industry needs to improve and evolve or customers will deem it irrelevant and stop paying for face-to-face advice.

But it’s also important to remem­ber the royal commission delved into misconduct, not case studies of good conduct.

Online update

Signs this week, after an array of policy measures and speeches, are that the housing market has likely bottomed.

That’s good news on several fronts, including for those in the online property settlement industry. But as NSW approaches a July 1 mandated start for property purchases to be settled online, it seems the industry is only inching towards an agreement on national standards and interoperability.

Banks, regulators, lawyers, land registries and industry players have been meeting for months on the topic and there is also an ­intergovernmental agreement ­review taking place that will ­report in coming months.

Fostering competition has been top of mind for the likes of the competition regulator, which wants online settlement platforms to be open and user friendly in the same way that the ASX equity market was opened up to competition from Chi-X Australia.

Last year, Australian Competition & Consumer Commission chairman Rod Sims expressed “significant competition concerns” about the electronic property settlement market. Some of those have since been ironed out but the industry has a way to go.