Westpac dropping adviser wing to Forsyth Barr

The move has been confirmed by Westpac who said in a statement that “we are in consultation with 32 Westpac NZ employees in our wealth team about a proposal to sell part of our wealth advisory business to Forsyth Barr.”

Principal at Financial Focus, Murray Weatherston told Good Returns that “given what the banks have done in Australia, it’s been a pretty sure bet that the same thing was going to happen here in New Zealand.”

“The banks have never made a decent go out of wealth. In the capital constrained environment they work in, and especially with the reserve bank requiring them to hold more capital, being in advice was just an inefficient investment for a bank from a capital point of view.”

Weatherson holds that the banks approach to financial advice has been unsustainable for a long time, “My view has been for a long time that the banks are actually salespeople. I don’t know anybody who has walked into a Westpac branch and has come out with an ANZ mortgage. If you walk into a Westpac wanting KiwiSaver advice you will walk out with a Westpac KiwiSaver, same goes for life insurance. These banks have used their internal wealth arms to distribute their own products.”

“From a strategic sense with the utilisation of capital that doesn’t cut the mustard.”

Weatherston says that this move by Westpac could signal a broader change in the adviser wings of the larger banks. He says that we can expect to see some of the other big Australian banks making similar moves in a timeframe anywhere between “one day to a couple of years.”

Weatherston says this with a laugh, but it is a reasonably short timeframe, which, if it happens, will have huge implications for the New Zealand financial advice sector at large.