Former Liberal Party leader John Hewson has questioned the viability of institutionally-owned wealth management, suggesting the banks may divest.
Speaking at the 14th annual Wraps, Platforms & Masterfunds conference in the Hunter Valley last week, Dr Hewson – who is also the chairman of Shartru Capital – said that in hindsight, the banks may be regretting their decision to acquire wealth management divisions over the past decade without “doing it on a global basis”.
“There was this era in Australia where our banks wanted to become broad-based financial conglomerates providing all sorts of financial services,” Dr Hewson said. “Westpac bought BT, ANZ bought ING, CBA bought CFS etc.
“I suspect that there will be a push by the major banks to break down the process of owning [wealth businesses, and that they will] move out of funds management [and] on-sell them,” he predicted.
Dr Hewson also questioned whether former CBA CEO David Murray was an appropriate person to lead the FSI, given its task of examining these issues.
“I was fascinated that they found a climate-denying banker to head that review,” he said. “I don't want to criticise David - I have the highest respect for him - [but] he was instrumental, I think, in the process whereby the CBA saw itself as a fund manager and a financial planner and a bank.”
The former opposition leader also asked whether we “ought to have” a royal commission into the “structure of funds management and superannuation management”, lamenting that the “industry funds have been given concessions”.
On the issue of FOFA, Dr Hewson said he accepted the government’s argument regarding the need to repeal elements of the legislation in order to reduce red tape for financial advisers and reduce the cost of advice, describing this motive as the “primary reason” behind the amendment agenda.
However, he added that serious problems remain for the industry in that many consumers “still feel they're getting paper stuffers rather than advice – people who sell them their product rather than actually giving them objective financial advice”.
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