Forsyth Barr is set to leapfrog Craigs Investment Partners as the largest authorised financial adviser (AFA) network in NZ in a deal to purchase the retail wealth arm of Westpac.
In a statement, a Westpac NZ spokesperson said the bank was consulting with 32 employees in its wealth team “about a proposal to sell part of our wealth advisory business to Forsyth Barr”.
“No decisions have been made, and as we are currently consulting with potentially affected employees, we won’t be commenting further at this stage,” the Westpac spokesperson said.
Westpac NZ has about 50 AFAs under its wing, according to the bank’s website, but it is understood the group would retain a core of advisers to service wholesale clients. In August this year, the-then Westpac NZ national manager wealth advisory head, Glen Macann, left after less than three months in the newly created role. Macann managed a team of about 20 senior advisers and reported to the bank’s head of private wealth, Katie Christoffersen.
The Westpac AFA numbers are down from over 70 in 2017 while Forsyth Barr – in an acquisitive mood of late – accounts for more than 146 AFAs on the Financial Services Provider Register, compared to just 112 three years ago.
With the Westpac advisers, Forsyth Barr would jump to almost 180 AFAs, well ahead of the 150-plus reported by Craigs.
While Forsyth Barr would inherit the Westpac AFA clients it’s not clear yet whether the proposed deal would also see an immediate change of underlying investments. Excluding KiwiSaver, Westpac has about $2.5 billion under management across its retail fund range.
Selling the retail advisory business would remove at least one compliance headache for Westpac as a wave of new regulation sweeps across the NZ financial industry. Namely, by exiting retail advice, the bank would avoid the regulatory risk embedded in the Financial Services Legislation Amendment Act (FSLAA) regime due to switch on next March. FSLAA removes the individual licensing for AFAs – among a raft of other changes – in exchange for entity-level regulation for all financial advice businesses.
Furthermore, the mooted sale – considered likely by industry insiders – mirrors the Australian-owned bank’s exit from the personal financial advice market in its home territory last year. All of the big Australian banks have sold most of their wealth management assets in the wake of the 2018/19 Royal Commission into financial services – although the trend was already in motion prior to the headline-hogging government enquiry.