Tower questions Westpac's move on BT
Tower's Jim Minto wonders what BT Funds Management will be like under the control of a bank.
Wednesday, August 28th 2002, 3:32AM
by Jenny Ruth
BT’s investment products have been distributed by independent financial advisers while WestpacTrust’s have been distributed though the bank’s branch network. Tower also uses independent financial advisers to distribute its products.
Even though WestpacTrust will be retaining the BT brand and Craig Stobo, BT’s New Zealand chief executive remains as head of the funds management operations, "BT is now run by bank management," Minto says.
"The question is will they be prepared to invest in independent advisers when they have bank distribution?"
Unlike the bank’s own network which it can direct to sell particular products, it can’t control independent advisers who don’t tend to back any single provider.
"That doesn’t sit comfortably in a bank board room. There’s not a clean cultural match."
Historically, banks have had trouble in distributing more complex products through their branch network, particularly in a downturn which shows up problems such as customers being 'mis-advised' to invest in inappropriate products, Minto says.
WestpacTrust may also run into trouble over who owns the customer, the fund manager or the independent adviser.
"What happens when the bank direct mails the adviser’s clients? Who wins out," he asks.
BT Funds Management chief operating officer Mike Newton points out that whilst BT has been bought by the bank BT has been appointed to lead its wealth management business.
"BT will continue to be managed and run by the same people."
He points out that BT's main distribution is through independent financial advisers and it won't do anything to upset these people.
"We would never do anything which was likely to damage that relationship."
He says that it's very early days for anyone to be making any speculation on how the business will work.
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