NAB loses appetite to authorise advisers
Senior NAB executive Andrew Hagger has candidly outlined the institutions’ waning will to be in the licensing business, as the royal commission hears evidence of the bank’s sale ambitions.
Counsel assisting the royal commission Rowena Orr QC tendered a document during proceedings which quoted Mr Hagger as saying: “The business model associated with aligned advisers needs to be reviewed in the current environment”.
Asked by Commissioner Kenneth Hayne to clarify his statement, Mr Hagger, who is chief customer officer (consumer banking and wealth management) at NAB and chairman of JB Were, gave an astonishing assessment of the authorised representative model.
“The aligned advice network consists of small businesses all around Australia which are advisory businesses,” Mr Hagger began.
“And through our licence…we stand behind the advice of those advisers. We stand behind appropriate advice and we stand behind inappropriate advice. And in return for that, we receive a licensee fee.
“To the extent that there is inappropriate advice in the network, the risk-reward equation…looks different today to what it looked like in the pre-FOFA days, because in the pre-FOFA days – in fact, I probably have to go back even further than that – but in the days of product economics into the advice world, the risk return equation was quite different.
“Now we see a different return profile and a different risk profile.”
Pressed further by Commissioner Hayne whether he means an equation that “works against NAB remaining in that type of arrangement”, Mr Hagger said his comments are broader than just his employer but that the appetite had diminished for “big organisations”.
However, he added that were “big institutions standing behind small businesses” no longer seen as a positive in the financial advice industry, then ASIC and other regulators would face pressure from a “more fragmented environment”.
The comments followed evidence tendered which confirmed that NAB is considering sale of its financial advice assets, despite Mr Hagger saying he did not wish to make an “announcement” at the royal commission.
30% of Aussies trust robo-advice
Nearly a third of Australians trust robo-advice, new research from Thinque has ...
New life insurance solution for professionals
Accredited advisers will soon be able to offer a complete life insurance solutio...
AMP board in hot water
AMP chairman David Murray, along with the rest of the board, could see their sea...