Headwinds blow ANZ wealth off course

04-Nov-2016

By Daniel Paperny

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ANZ chief executive Shayne Elliott has cited customer retention and engagement as the catalyst behind the bank’s mooted retreat from its wealth, advice and life insurance operations in Australia.

Speaking at a media briefing yesterday on ANZ’s full-year results, Elliott said the bank needed to focus on allocating its capital and resources where it could have a competitive advantage and “we don’t think that’s in the manufacturing of life insurance”.

“We have to continually improve the way that we connect with our customers, not just in wealth but across our business to [meet] the expectations of our community,” Elliott said.

The comments follow the bank’s decision earlier this week to sell off its retail and wealth operations in Asia, and come off the back of an underwhelming full-year result for ANZ, which announced a 24 per cent fall in statutory profit after tax to $5.7 billion for the year to 30 September.

Elliott stressed that the decision was “not final”, but that negotiating the sale of the Australian life insurance, advice, investments and superannuation businesses would be “very complicated but not impossible”.

“These are difficult decisions but ones required to be successful in a banking environment that is dominated by [fiscal and structural] headwinds,” Elliott said.

“I want ANZ to be ahead of the game and performing well both in the eyes of our customers and shareholders.”

Commenting on the announcement, non-aligned advice group Omniwealth head Matthew Kidd said the decision should be seen as “a wake-up call” for other institutions to look at their financial planning divisions and consider whether it was in their best interests – in terms of risk and compliance costs – to continue to service that market.

“The landscape is going to change significantly over the next three to five years,” Kidd told financialobserver.

“The changes to adviser education standards, the extra focus on compliance from regulators and the hanging threat of a royal commission are big factors in what are going to drive the big end of town forward.”

Kidd noted that while many banks entered the financial planning industry to distribute more products, ongoing costs and regulator scrutiny had prompted many to reconsider and “clean up their act”.

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