Westpac and Viridian rethink financial planning deal

Westpac and Viridian are rethinking a deal that sees the boutique acquire a portion of the bank’s financial planning business.

Westpac CEO Brian Hartzer (left). Picture: AAP

Westpac and Viridian are considering recutting a deal that sees the boutique acquire a portion of the bank’s financial planning business, after a group of its most senior advisers shunned the transaction.

Of Westpac’s 39 partnership planners, which share revenue with the bank, about 19 had agreed to shift to Viridian as of yesterday, with a similar number not accepting an offer, according to sources. Offers to planners in the next rung down from the partnership group will be made in coming days.

The 39 partnership planners are said to have funds under advice of more than $5 billion.

Westpac’s exit from the financial advice market sees tens of thousands of customers potentially displaced as their planners look for new homes. The bank last month announced it would stop offering financial advice via its salaried planners and via practices that sit under its dealer groups.

The Australian understands that one option being considered by the parties is that Viridian takes a total of 120 staff from Westpac — including advisers and support employees — down from about 175 announced last month. That would probably see more than 500 redundancies from the bank, depending on how many roles were redeployed within Westpac.

A Westpac spokesman yesterday said the bank didn’t comment on the speculation from unnamed sources. “However, Westpac continues to work closely with its ­financial advisory team to ensure as best a transition as possible.”

Viridian boss Glenn Calder said that, from his perspective, the transaction was on track.

“The fundamentals of the deal and the contract haven’t changed,” he said.

Westpac outlined initial estimates of one-off costs of $250 million-$300m for its advice wind-down, and said proceeds from the partial sale would depend on the size of the business that transitions to Viridian.

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

The decision to retreat from financial advice also prompted a restructure of Westpac’s BT unit, resulting in the management of the division’s remaining businesses shifting to the consumer and business banks.

Viridian held information sessions in Sydney yesterday for those wanting to find out more about the company, which was founded by former Westpac planners.

The Australian foreshadowed that Westpac and Viridian were in late-stage talks over a financial planning deal in February.

More broadly, the financial planning industry is in a state of flux following several scandals and misdeeds that were fleshed out during the Hayne royal commission. The industry is bracing for several reforms as a result, including annual opt-ins by clients to continue receiving and paying for advice.

That follows damning revelations that several banks and wealth groups were charging customers fees and not providing any services and in some instances were levying fees on dead people’s accounts.

Westpac’s three main rivals have either exited the advice industry or are in the process of doing so.

Last year, ANZ sold its planning operations and dealer groups to wealth group IOOF, while Commonwealth Bank and NAB are considering separating or selling their advice divisions.