- In the banking royal commission today, Westpac CEO Brian Hartzer was questioned about the future of financial planning.
- He says technology, in the form of robo-advice, could be the answer for affordable financial planning.
- Westpac is still in the wealth management business while the bother three big banks headed for the exit.
Westpac CEO Brian Hartzer sees robo-advice as a way for ordinary Australians to get affordable financial planning advice.
Hartzer, answering questions before the financial services royal commission, says the move by Australian banks into wealth management had clearly not been a success.
“I don’t think banks fully thought through how the model needed to evolve to be consistent with being part of a service business that focuses on long-term relationships,” he told the hearing.
“I think banks just under underestimated how different the models were and how the model needed to evolve to be consistent with the way banks should run themselves.”
The misconduct being investigated by the royal commission includes the fee for no service scandal where customers were charged for financial advice they didn’t receive.
The royal commission is also looking at the fundamental conflict between profits and acting in the bets interests of a customer.
Westpac has so far held on to its BT wealth management business, while its fellow big four banks have headed for the exits, selling off their financial planning arms.
The Commonwealth last month closed the sale of its wealth management arm, Colonial First State Global Asset Management to Japanese asset manager Mitsubishi UFJ Financial Group (MUTB) in a $4.13 billion cash deal.
Also last month the ANZ Bank sold of its pensions and investments businesses to IOOF and the NAB still has MLC up for sale.
Hartzer has previously said it’s becoming more expensive to provide financial advice as regulatory overheads rise.
Today he was asked if high quality financial advice was ever going to be affordable for ordinary Australians.
He says technology could provide that.
“There are a number of developments around the world in what’s sometimes colloquially referred to as robo advice which is where a customer essentially self-serves,” Hartzer says.
The customer inputs information, including their risk appetite, and the system makes a recommendation.
“I think developments in that regard are going to become more available and be more scaleable for ordinary people,” he said.
Hartzer says Westpac does have a large number of customers who are happy with their advisers.
“We do have a significant number of customers who do look to us as a trusted source of advice, and we would like to be able to help them with that,” he said.
“So to just walk away from it entirely to a certain extent is to abandon our customers.”