In its half-year results this morning, NAB announced that it will divest its MLC business as part of a plan to “reshape” its wealth management business.
“This involves an intention to pursue an exit of the advice, platform & superannuation and asset management businesses, currently operating under the MLC and other brands,” said NAB.
“Separation is targeted by the end of the 2019 calendar year, subject to market conditions and the required approvals.”
NAB will retain its JBWere and nabtrade businesses.
The announcement confirms hints made by NAB chief customer officer for consumer and wealth Andrew Hagger at the royal commission hearings last week.
It also follows the sale of ANZ’s wealth business to IOOF.
So from reading the press release, they’re moving from a bank-owned vertically integrated business to an independently owned vertically integrated business?
With the MLC product manufacturing arm reportedly being part of this spin-off. Clients will still face the same issues of a conflict of interest and a tendency to recommend ‘in-house’ products… This solves the banks image problem and reduce their legislative risk, but will do nothing meaningful for clients.
You can’t be compliant and make money in financial planning since fofa. Best interest duties mean the vast majority and I’m talking 95%, of your clients did not warrant changing funds, do not warrant that fee for service rort your convinced them of and do not need your yearly token meeting to justify your fee.
Hourly rates for advice is the only solution. Everything else is not compliant and you know it.
So just like Accountants, Lawyers,etc. Advisers will bill a client for 10 hours work when in reality they only did 5 hours work. Can’t wait to bill clients $500 for “printing costs.”
An hourly fee is ‘fee for service’.
So every legally independent firm must be loss making, Steven?
Someone better tell MLC – you can’t use the word “independently owned” anymore…. lol.
When the Banks all got on the band wagon and decided it would be neat to own a fund manager / life company, i groaned aloud. There was NEVER any hope on earth that they would be good at this, life insurance and banking are NOT culturally aligned.
Banks are (and always have been) greedy and self serving, the polar opposite of what the old Mutual societies represented. There will be pain, but so long as the regulator stops other unsuitable non-aligned businesses taking over then the repair and restore process can begin.
Now all we need is for the banks to get their fingers off distribution (vertical integration) , that will continue to be a problem for the Financial planning profession until they do.
Hard to see anyone buying the whole thing, with a ban on vertical integration looking increasingly likely. But the financial planning operations could be very attractive as an independent business if they come with guarantees of referrals flow from NAB retail bank. Similar to Bridges arrangement with the credit unions.
The separation from the bank is the key. Vertical integration needs to be assessed on its own merits rather than be tainted by the behaviour of the banks. Investment advice and strategy are interrelated. Ongoing servicing and managing behaviours in response to market volatility is also a key role for an advisor. And finally the reality of managing clients funds needs to be assessed. Individual bespoke portfolios dilutes the ability to implement robost investment research and fund manager/ stock research.
Are you saying vertical integration is OK for AMP or IOOF or Henderson Maxwell or the thousands of accountants who inappropriately recommend SMSFs, because they aren’t called “banks”?
Yes because I am unconvinced that the alternatives are any better.All we hear is negative comments regarding in house products. Where is your comparison of the investment performance of the alternatives to the inhouse products ? The best interest duties work both ways.
Man when will we ever learn a home loan is not the only way to garnish wealth – bankers have always had disdain for anyone in wealth !! The ‘allfinance’ model is dead unless of course its a home loan, credit card & bank account !! NAB doing such an awesome job with negative NPS everywhere !!
This has been on the cards longggggggg before the royal commission
I’m not a buyer, but happy to help good advisers find a new home 🙂
The media reports have lacked detail: From the Half Year Results….
MORE FOCUSED WEALTH OFFERING
• High net worth customers supported by JBWere and NAB’s Private Bank
• Self directed customers supported through nabtrade
• Explore on-going arrangement with MLC to provide NAB customers with
continued access to advice
INTEND TO PURSUE DIVESTMENT OF MLC1
• Commenced strategic review in mid 2017
• Focus on core strengths in banking consistent with simplification agenda
• Opportunity for MLC to set independent strategy and investment priorities
• Expect NAB ROE to increase on separation
EXAMINING A BROAD RANGE OF EXIT OPTIONS, INCLUDING PUBLIC MARKETS
• Public market options include demerger and IPO
• Targeting listing of MLC by end of 2019 calendar year, subject to market
conditions and Board, regulatory and other approvals
• Flexibility to consider trade sale
thanks for the summary!
It starts…….
And the buyer would be …????
Not many buyers. ACCC won’t allow it to be another bank. Leaves IOOF, AMP (eek), Netwealth, HUB24……Nippon? Demerger seems most likely I think. A good result for NAB and MLC I think.