Westpac spruiks wealth advice
WESTPAC is planning a significant expansion of its wealth management division to capitalise on growing demand for financial advice as the population ages.
With more customers tipped to seek out expert financial opinion as baby boomers hit retirement, the bank aims to substantially increase the number of advisers on its books over the next five years.
There are about 1000 financial planners working for Westpac and its wealth management arm, BT.
But executives are finalising plans to raise this number markedly, with a focus on providing "scaled" financial advice that is narrower in scope and lower in cost.
The bank believes demand for this type of product will grow in an environment of slower house price growth and greater sharemarket volatility.
The industry is also seeking out new business models, as laws to take effect in July will prevent advisers from accepting commissions when signing up new clients.
The move is the latest instance of banks seeking to bulk up their presence in wealth management, with Commonwealth Bank this month opening a new platform targeting retail investors.
With profits from lending tipped to come under pressure from slower credit growth, banks are eyeing wealth management for its potential to generate big profits.
In a sign of the industry's growth trajectory, the value of superannuation is projected to balloon from $1.4 trillion today to some $6 trillion by 2030.
Wealth management is also attractive to banks because it is "capital light" - unlike lending, which requires large amounts of capital to be held against loans.
Financial advice has traditionally been seen as a product for the wealthy, but Westpac anticipates that lower returns from housing and sharemarkets will see a broader range of people search for expert opinion.
The push to provide more scaled financial advice is included in the bank's new sustainability strategy, to be launched today, which is structured around major economic issues, including the ageing population.
Other parts of the strategy include offering more flexible working options for women and making available $6 billion in commercial loans to the clean technology sector.
Banks have been attacked by environmental groups for promoting their green credentials while financing carbon-intensive industries, and this strategy will not change Westpac's policies on such lending.
The bank's head of strategy, Frank Paduch, said the sustainability plan was devised to support the bank's growth as well as contribute to social or economic goals.
"There's a reality that we have significant roles in the economy and one of those is the efficient allocation of capital. It's a balancing act," he said.
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