The banking industry’s costly 20-year detour into wealth is almost over

Those helming the banks in the late 1990s and early 2000 were looking for growth and diversification – they were attempting to reinvent themselves into financial services supermarkets.


Back then, the key measure of success for banks was “products per customer”. Five was their nirvana, but few, if any, got close. Cross-sell was the mantra and once sleepy tellers became truly incentivised salespeople.

It was easy to understand the dollar signs reflected in the eyes of the bank regimes at the time. Compulsory superannuation had resulted in a vast vault of hundreds of billions of dollars (now close to $3 trillion) in funds being saved outside the banking system and they wanted in on the action.

As students of history, today’s crop of bank chief executives have spent the past couple of years selling, winding down or attempting to demerge the various parts of what have been placed under the umbrella of wealth management – including personal advice, superannuation, insurance and investment platforms.

Ultimately, wealth management was technologically, regulatorily and culturally disrupted. The emergence of the new digital platforms allowed investors product choice, the regulators cleaned up excessive fees and shoddy service and the banks were banned, for the most part, from financially incentivising operatives to flog products. Rules also changed to ensure that advisers were sufficiently financially qualified to provide advice.

Meanwhile, legislating MySuper provided low-fee options for the millions who opted for less expensive management of their superannuation.

In the ten years to 2020, the economics of the industry had changed almost beyond recognition. The financial services royal commission, which resulted in the big four banks and AMP needing to make around $10 billion in provisions for remediating wealth management customers, was just the final straw.

On Monday, one of the last of these wealth management purges was executed as the National Australia Bank announced the $1.44 billion sale of MLC, comprising its advice, platforms, superannuation and investments and asset management businesses. NAB had already sold 80 per cent of its life business in 2016 for $2.4 billion.


Westpac sold its loss-making financial advice business to Viridian in 2019 but the remainder of its BT Financial Group businesses – private wealth, superannuation, platform life, insurance and investments – has been rolled into its consumer and business banking divisions and is under review. This is code for looking for an exit strategy.

MLC’s acquirer, IOOF, is looking to ride the industry consolidation wave that has been created by the bank’s exit from wealth management. In 2020, after finally achieving regulatory clearance, IOOF bought ANZ’s pensions and investments business for $825 million.

For IOOF, the MLC acquisition represents a chunky risk and comes with a chunky price tag (17.3 times MLC’s 2020 cash earnings) but one that is being funded via a $1 billion equity issue.

If all goes according to plan, it should be able to notch up some synergy savings – sufficient to have confidence in its forecast that the deal will be earnings accretive.

But digesting two very large acquisitions in order to create Australia’s new wealth management powerhouse at a time when industry funds are stealing the march on market share is a risky play for IOOF’s investors.

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Tiwi Islands police officer reflects on life in the force, and how he came close to leaving a 20-year career

Senior Constable Karl Gunderson never anticipated he would end up policing his own community.

But for the past 12 months, he has been one of two officers based on the Tiwi Islands in Pirlangimpi, the community where his grandparents met and his father was born.

“I always wanted the opportunity to come home but honestly never thought I would ever get the opportunity as it is only a two-man station and very sought after,” he said.

“But after my battles with my mental health and stuff, I thought just throw my hat in the ring and see what happens.”

With almost 20 years’ experience as a Northern Territory police officer, the Tiwi man had seen the best and the worst the NT had to offer.

Senior Constable Gunderson and another officer serve two communities on the Tiwi Islands.(ABC News: Melissa Mackay)

But it was his last posting, a two-year stint as a detective in the remote town of Tennant Creek in Central Australia, that almost broke him.

“It had a pretty devastating effect on my mental health,” he said.

“Towards the end, I started to really struggle with some aspects, not just of the work, but how isolated you are in the township.”

Tennant Creek is about five hours’ drive from the nearest towns of Alice Springs or Mt Isa.

During his tenure in the town of around 3,000 people, the horrific rape of a two-year-old girl made headlines around the globe.

A 27-year-old Tennant Creek man has since been jailed for 13 years for the crime.

“It was an extremely intense working environment in Tennant, and it was quite difficult at times to see and have to police in that community,” he said.

But in his first 11 months back on home country, Karl said his mental health had improved significantly.

“Sometimes this job can be quite suffocating, it can take its toll on you and you see a lot of the negative aspects of life, so being back home and being able to see the positives and interact with family again is really uplifting.”

Karl Gunderson
Karl Gunderson grew up visiting family on the Tiwi Islands, spending time learning to fish and hunt.(ABC News: Melissa Mackay)

Locals policing locals

Since moving to Pirlangimpi, the senior constable, who grew up between Darwin and the Tiwi Islands, said he had had to declare a conflict of interest twice.

But he said his family members, who stretch across the three Tiwi Islands communities of Pirlangimpi, Milikapiti and Wurramiyanga, were understanding of his role as a police officer.

“Like all communities, the majority of people are related, so from time to time people do get on each other’s nerves,” he said.

We have a social club here as well which operates four days of the week so there’s general disturbances and alcohol-related disturbances,” he said.

A sign reading "Welcome to Pirlangimpi'. Behind the sign is dry grass and green plants.
Pirlangimpi is one of two communities on Melville Island, with a population of around 350 people.(ABC News: Melissa Mackay)

In fact he said he believed his connection to the community had helped resolve problems.

“It does have its challenges, but I think the community really do grow in strength and in confidence knowing that they’ve got one of their own in place,” he said.

“It might be too difficult to talk to a non-Indigenous person about an issue, whereas with someone like me, they’re more inclined to come and see me.”

Community leader Patrick Puruntatameri said it was good to have a local police officer who enjoyed being on country.

“It’s good to have Karl back [in community], he likes it here and he’s got family here. He’s a good police officer and I think he loves it,” Mr Puruntatameri said.

The officer has a year left of his two-year posting to the Pirlangimpi community but said he could see himself being on country for longer.

“My kids will come up, they get to spend time with dad, they get to spend time with their grandfather, I’ve got family members here … I can’t see myself going anywhere,” he said.

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