WESTPAC'S BT Financial Group has signalled a "land grab" in wealth management, arguing the sector's importance to banks over the next 20 years will rival the significance of mortgages over the past two decades.
In a market update yesterday, the BT Financial chief executive, Brad Cooper, predicted acquisitions and increased investment as banks positioned themselves for a slice of the surging superannuation and wealth pie that was expected to hit $6 trillion by 2030.
He said increasing superannuation contributions from 9 per cent to 12 per cent by 2019-20 would also result in a sharp rise in money flowing into the sector, and the profit pool would grow 43 per cent to nearly $10 billion by 2017.
"There's a land grab going on for that market share in the next period of time," Mr Cooper said. "What mortgage share has been to banks over past 20 years, we think the growth in wealth will be to banks over the next 20."
In a sign of banks trying to lock customers into longer relationships, Mr Cooper said banks have not been successful in holding on to customers once they switched from being mortgage holders to wealthy investors.
BT will target "prime of life" customers above the age of 45, and small and medium enterprises, particularly those with self-managed super funds.
"Wealth will increasingly be a strong growth driver supported by changing demographics, regulation and customer preferences," Mr Cooper said, but the introduction of low-cost no-frills super plans would make servicing small investors less attractive, with continuing advice "not going to be worthwhile except for high-net-wealth individuals".
Acquisitions were on BT's agenda, he said, highlighting how 11 large companies controlled 75 per cent of the market.
"We think there will be many players looking at their models and looking at their tenure in the industry and we will keep a watching brief on where those opportunities might pad out our scale and capability as well."
Commonwealth Bank recently bought the independent accountancy and financial advice company Count Financial in a deal worth nearly $400 million, AMP bought Axa's regional business, and National Australia Bank acquired Aviva.