Opportunities in Wealth Management
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Opportunities in Wealth Management

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Opportunities in Wealth Management Opportunities in Wealth Management Presentation Transcript

  • CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 Opportunities in wealth management David Clarke Group Executive 28 September 2001 1
  • Disclaimer CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 The material contained in the following presentation is intended to be general background information on Westpac Banking Corporation and its activities as at 29 September 2001. The information is supplied in summary form and is therefore not necessarily complete. Also, it is not intended that it be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs. 2
  • Agenda CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Trends and opportunities • Current position • Westpac’s strategy to capitalise on these - across the value chain • Sales & distribution • Product • Investment management • Summary 3
  • Trends CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Demographic - aging population • Mandatory retirement saving • Investment risk sits with the individual • Many people currently under-funded for retirement 4
  • Trends (continued) CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Industry consolidation • Have entered period where lower returns are likely • Increased requirement for responsible investments 5
  • Wealth management opportunities are driven by demographic forces CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 Population Demographic Trend Financial assets & liabilities CAGR 1991 to 2001 19 30 20 13 20 10 % % 10 8 10 0 0 20-39 40-59 60-70 79+ s ds st s es sit ru un 2001 2021 nc po it t rf va de Un pe ad Su nk & Ba an Lo 6 Source: ABS & RBA
  • The target audience - mass affluent 65+ Who 18-24 CSFB Conference, 28 September 2001 2% CSFB Conference, 28 September 2001 9% 50-64 22% • Personal Income $50k-$90k or 25-34 • Household income $70k-$120k 25% or • Investments >$100k 40-49 35-39 • Primary Age 35-49 29% 13% Affluent Mass Mass Affluent Market % Population 4.4% 22.5% 58.0% % Investment 14.6% 69.1% 13.7% Wallet 7 Source : Roy Morgan - Single Source - Finance Monitor, 2001
  • Which will lead to opportunities CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Continuing market growth • Increased demand for retirement income products • Earlier interest in retirement saving • Continuing high demand for advice, but more transparent, differentiated • Development of low cost, or niche products e.g ecofund 8
  • CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Trends and opportunities • Current position • Westpac’s strategy to capitalise on these - across the value chain • Sales & distribution • Product • Investment management • Summary 9
  • Advantages of being a bank CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Large existing customer base • Well placed to facilitate consolidation of financial needs • Position of trust • Extensive distribution coverage - range of channels • Knowledge of customer base 10
  • What our customers say – “I choose to invest with Westpac because it is…” CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Safe, sound and stable. • Reassuring and conservative. • In the ideal position to understand customers' needs and provide appropriate solutions for all Australians 11 Source -Dangar Research Westpac Financial Services Positioning Study, August 2001
  • “Overall the need in the market CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 is for advice and advice from someone I can trust. Banks are uniquely placed to benefit from this need and fulfil customer needs.” 12 Source -Dangar Research Westpac Financial Services Positioning Study, August 2001
  • Current situation CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • 16% of Westpac customers have an investment product (which is no different from the general population - 15%). • The issue is the number of those Westpac customers that hold investment products with other institutions. Of our customers Of our customers who have a who have mortgage, 75% investments, 80% have it with us have it elsewhere • This is a result of the cultural perceptions of Westpac “bank” rather than a specialised “investment provider”. 13 Source : Westpac data and analysis, June 2001
  • Westpac Financial Services penetration CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • There are currently 575,760 WFS customers against a 5.2m Westpac retail customer base, generating a 12% customer penetration. • This provides significant opportunity to grow the Wealth Management business through our existing Westpac customer base. 30% 28% 25% 20% 18% 15% 12% 12% 10% 9% 10% 8% 5% 0% Private Priority Priority Personal Small Middle Total Bank Banking Business Business Centre 14 Source : Westpac data and analysis, June 2001
  • Westpac current market position Total Funds Under Management Retail Funds Under Management CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 $bn $bn 98.9 75.1 46.3 51.4 36.6 35.6 32.6 26.7 22.6 16.6 14.4 DB (Colonial) T Westpac (Colonial) Westpac AMP BT (MLC) AMP (MLC) NAB NAB B CBA CBA 1. 2. 3. 4. 5. 10. 1. 2. 3. 4. 5. 15 Source: ASSIRT June 2001
  • Good growth in retail FUM 27,000 CAGR CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 $m 25,000 23,000 +3% ISPT 21,000 Westpac Property 19,000 Trust 17,000 15,000 +14% 13,000 11,000 Total Funds Under Management 9,000 Retail Funds Under Management 7,000 Jun Sep Dec Mar Jun Sep Dec Mar Jun 1999 1999 1999 2000 2000 2000 2000 2001 2001 16 Source: ASSIRT
  • Retail inflows improving strongly Quarterly Retail Inflow Trend CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 $m 600 500 400 300 200 100 0 Mar`99 Jun`99 Sep`99 Dec`99 Mar`00 Jun`00 Sep`00 Dec`00 Mar`01 Jun`01 17
  • CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Trends and opportunities • Current position • Westpac’s strategy to capitalise on these - across the value chain • Sales & distribution • Product • Investment management • Summary 18
  • Our strategy to capitalise on opportunities across the value chain Investment Distribution CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 Administration / Retail Advice Management Service Proportion of Profit Pool 17% 29% 34% 20% (Australia) Required • Scale • Scale • Scale • (Perceived) Capabilities independence • Process • Marketing • Marketing efficiency and support and support • Service excellence • System • Performance • Process excellence history efficiency • Process efficiency • Performance • System (compliance) brand excellence 19 Source: Accenture Analysis, ASSIRT, Rainmaker MER data
  • Current Westpac distribution Product/Service Distribution Segment CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 Institutional Institutions Sales Middle Market Westpac BFAs Small Business Westpac Planners Private Priority Westpac Advisors Personal 20
  • Distribution opportunities Product/Service Distribution Segment CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 Institutional Institutions Sales Middle Market Westpac BFAs Small Business HP Westpac JDV Planners Private IFAs Priority Westpac Advisors Personal 21
  • Distribution Initiatives CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • CRM • Propensity modelling • Leads management • systems • qualification process • therefore, conversion rates • Front end software • Retention programmes 22
  • Adviser network growth continues Planner/Adviser Numbers CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 1200 1000 % 800 R = 18 CAG 600 400 200 0 1995 1996 1997 1998 1999 2000 Mar-01 Jun-01 Sep-01 2002 2003 Actual Target 23
  • Advised Sales per FTE/Month ($000s) 200 300 400 500 600 700 800 0c t9 900 9 De c-9 9 Fe b- 00 Ap r-0 0 Ju n- 00 Au g- 00 Oc t-0 0 De c- 00 Fe b- Advised Sales per FTE 01 Ap r-0 1 Ju n- 01 Adviser productivity improving 24 CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001
  • Adviser productivity is top tier Planner productivity ($m per planner) CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 6 5 4 $m 3 2 1 0 WBC CBA AMP ANZ NAB AXA 25 Source: Plan For Life & Salomon Smith Barney estimates
  • Products - Focus on ‘wrapped offerings’ Product/Service Distribution Segment CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 Custody Discrete Mandate Institutional Institutions Pooled Sales Funds Middle Market Business Westpac BFAs Super Small Business Indiv. Mgd HP Portfolio Westpac JDV Margin Planners Private Lending Master Trust IFAs Priority Westpac Retail Advisors Product Personal 26
  • Sound retail funds performance % of Funds Meeting or Exceeding Peer Group Median CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 100% 80% 60% 55% Equal 40% 4th 20% 0% Aug-99 Nov-99 Feb-00 May-00 Aug-00 Nov-00 Feb-01 May-01 Aug-01 27 Source Morningstar, Open Funds >$10m
  • Looking closer... % of Funds Meeting or Exceeding Peer Group Median CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 1 year 3 years Trend % % ING 79 60 First State 68 78 AXA 56 0 Westpac 55 38 CBA 55 70 AMP 44 61 NAB/MLC 42 50 ANZ 38 50 28 Source Morningstar, Open Funds >$10m, June 2001
  • Westpac Investment Management CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Focused on core competencies: • Australian shares • Australian fixed interest • Tactical asset allocation • Low cost, scalable operation 29
  • Growth initiatives CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 Servicing & Investment Distribution/ Advice Processing Management & Retail Service Products • Upgrade • Maintain • Create • Grow sales Master superior fund alternative force & Trust performance distribution upgrade platform models skills • Source best of breed • CRM/Leads • Upgrade products management software tools 30
  • CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • The changing landscape • Banks’ positioning • Wealth management value chain • Sales & distribution • Product • Investment management • Summary 31
  • Acquisitions CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Not interested in profitless growth • Must add shareholder value • Watching brief • Our strategy is not dependent on acquisitions • Could accelerate achievement of the strategy 32
  • Our wealth management strategy CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 • Leveraging our comparative advantage – large customer base, warm leads and reduced search costs • Expanding distribution size and capability • Accessing & integrating ‘best of breed’ products • Balancing growth and profitable returns 33
  • … and we have in place a high growth and high return wealth management business CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 NPAT $m 254 29% CAGR* 195 148 149 90 101 1997 1998 1999 2000 1H 2001 Embedded value uplift * Excluding accounting impacts 34 Source: Westpac Financial Services Group Statutory Accounts
  • CSFB Conference, 28 September 2001 CSFB Conference, 28 September 2001 35