opportunities in wealth management
TRANSCRIPT
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Opportunities in wealthmanagement
David ClarkeGroup Executive28 September 2001
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DisclaimerDisclaimer
The material contained in the following presentation isintended to be general background information on WestpacBanking Corporation and its activities as at 29 September2001.
The information is supplied in summary form and is thereforenot necessarily complete. Also, it is not intended that it berelied upon as advice to investors or potential investors, whoshould consider seeking independent professional advicedepending upon their specific investment objectives, financialsituation or particular needs.
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•• Trends and opportunitiesTrends and opportunities•• Current positionCurrent position•• Westpac’s strategy to capitaliseWestpac’s strategy to capitalise
on these - across the value chainon these - across the value chain•• Sales & distribution Sales & distribution•• Product Product•• Investment management Investment management
•• SummarySummary
AgendaAgenda
3
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TrendsTrends
• Demographic - aging population
• Mandatory retirement saving
• Investment risk sits with the individual
• Many people currently under-funded for
retirement
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Trends (Trends (contcontinuedinued))
• Industry consolidation
• Have entered period where lower
returns are likely
• Increased requirement for responsible
investments
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0
10
20
30
20-39 40-59 60-70 79+
2001 2021
Wealth management opportunitiesWealth management opportunitiesare driven by demographic forcesare driven by demographic forces
810
13
19
0
10
20
Bank d
epos
its
Loan
& ad
vanc
es
Supe
r fund
s
Unit tru
sts
Financial assets & liabilitiesCAGR 1991 to 2001
%
Source: ABS & RBA
Population Demographic Trend
%
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18-249%
25-3425%
50-6422%
65+2%
40-4929%
35-3913%
Affluent Mass MassAffluent Market
% Population 4.4% 22.5% 58.0%
% Investment 14.6% 69.1% 13.7% Wallet
The target audience -The target audience -mass affluentmass affluentWho
Source : Roy Morgan - Single Source - Finance Monitor, 2001
• Personal Income $50k-$90kor
• Household income $70k-$120kor
• Investments >$100k
• Primary Age 35-49
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Which will lead to opportunitiesWhich will lead to opportunities
• Continuing market growth
• Increased demand for retirement incomeproducts
• Earlier interest in retirement saving
• Continuing high demand for advice,but more transparent, differentiated
• Development of low cost, or nicheproducts e.g ecofund
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•• Trends and opportunitiesTrends and opportunities•• Current positionCurrent position•• Westpac’s strategy to capitaliseWestpac’s strategy to capitalise
on these - across the value chainon these - across the value chain•• Sales & distribution Sales & distribution•• Product Product•• Investment management Investment management
•• SummarySummary
9
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• 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
Advantages of being a bankAdvantages of being a bank
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What our customers say –What our customers say –““I choose to invest with WestpacI choose to invest with Westpacbecause it is…because it is…””
• Safe, sound and stable.
• Reassuring and conservative.
• In the ideal position to understandcustomers' needs and provideappropriate solutions for all Australians
Source -Dangar Research Westpac Financial Services Positioning Study, August 2001
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“Overall the need in the marketis for advice
andadvice from someone I can trust.
Banks are uniquely placed tobenefit from this need and
fulfil customer needs.”
Source -Dangar Research Westpac Financial Services Positioning Study, August 2001
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Current situationCurrent situation
Source : Westpac data and analysis, June 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 thathold investment products with other institutions.
Of our customerswho have a
mortgage, 75%have it with us
Of our customerswho have
investments, 80%have it elsewhere
• This is a result of the cultural perceptions of Westpac“bank” rather than a specialised “investment provider”.
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Westpac Financial ServicesWestpac Financial Servicespenetrationpenetration
• There are currently 575,760 WFS customers against a 5.2mWestpac retail customer base, generating a 12% customerpenetration.
• This provides significant opportunity to grow the WealthManagement business through our existing Westpaccustomer base.
Source : Westpac data and analysis, June 2001
8%
28%
18%
10% 9%12% 12%
0%
5%
10%
15%
20%
25%
30%
PrivateBank
PriorityBankingCentre
Priority Personal SmallBusiness
MiddleBusiness
Total
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46.332.6 26.7
16.6 14.4
CB
A(C
olo
nia
l)
NA
B(M
LC
)
AM
P BT
Wes
tpac
Westpac current marketWestpac current marketpositionposition
$bn $bn
Source: ASSIRT June 2001
98.9
75.1
51.436.6 35.6
22.6
CBA
(Colo
nia
l)
AM
P
NA
B
(MLC
)
DB BT
Wes
tpac
Total Funds Under Management Retail Funds Under Management
1. 2. 3. 4. 5. 10. 1. 2. 3. 4. 5.
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Good growth in retail FUMGood growth in retail FUM
7,000
9,000
11,000
13,000
15,000
17,000
19,000
21,000
23,000
25,000
27,000
Jun1999
Sep1999
Dec1999
Mar2000
Jun2000
Sep2000
Dec2000
Mar2001
Jun2001
+14%
+3%
CAGR
ISPTWestpac Property
Trust
Total Funds Under Management
Retail Funds Under Management
$m
7,000
9,000
11,000
13,000
15,000
17,000
19,000
21,000
23,000
25,000
27,000
Jun1999
Sep1999
Dec1999
Mar2000
Jun2000
Sep2000
Dec2000
Mar2001
Jun2001
+14%
+3%
CAGR
ISPTWestpac Property
Trust
Total Funds Under Management
Retail Funds Under Management
$m
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Quarterly Retail Inflow Trend
Retail inflows improving stronglyRetail inflows improving strongly
Mar`99 Jun`99 Sep`99 Dec`99 Mar`00 Jun`00 Sep`00 Dec`00 Mar`01 Jun`01
$m
0
100
200
300
400
500
600
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CS
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eptember 2001
Septem
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•• Trends and opportunitiesTrends and opportunities•• Current positionCurrent position•• Westpac’s strategy to capitaliseWestpac’s strategy to capitalise
on these - across the value chainon these - across the value chain•• Sales & distributionSales & distribution•• ProductProduct•• Investment management Investment management
•• SummarySummary
18
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Our strategy to capitalise onOur strategy to capitalise onopportunities across the value chainopportunities across the value chain
AdviceDistribution
/ RetailService
InvestmentManagement
Administration
Proportion ofProfit Pool(Australia)
17% 29% 34% 20%
RequiredCapabilities
• Scale
• Processefficiency
• Systemexcellence
• Scale
• Marketingand support
• Performancehistory
• Performancebrand
• Scale
• Marketingand support
• Processefficiency
• Systemexcellence
• (Perceived)independence
• Serviceexcellence
• Processefficiency(compliance)
Source: Accenture Analysis, ASSIRT, Rainmaker MER data
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Current Westpac distributionCurrent Westpac distribution
Institutions
Middle Market
Small Business
Private
Priority
Personal
InstitutionalSales
Westpac BFAs
WestpacAdvisors
WestpacPlanners
Product/Service Distribution Segment
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Distribution opportunitiesDistribution opportunities
InstitutionalSales
Westpac BFAs
WestpacAdvisors
WestpacPlanners
Product/Service Distribution Segment
IFAs
HPJDV
Institutions
Middle Market
Small Business
Private
Priority
Personal
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Distribution InitiativesDistribution Initiatives
• CRM
• Propensity modelling
• Leads management
• systems
• qualification process
• therefore, conversion rates
• Front end software
• Retention programmes
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Adviser network growth continuesAdviser network growth continues
Planner/Adviser Numbers
0
200
400
600
800
1000
1200
1995 1996 1997 1998 1999 2000 Mar-01 Jun-01 Sep-01 2002 2003
Actual Target
CAGR = 18%
0
200
400
600
800
1000
1200
1995 1996 1997 1998 1999 2000 Mar-01 Jun-01 Sep-01 2002 2003
Actual Target
CAGR = 18%CAGR = 18%
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Adviser productivity improvingAdviser productivity improving
200
300
400
500
600
700
800
900
0ct 9
9
Dec-99
Feb-0
0
Apr-00
Jun-0
0
Aug-00
Oct-00
Dec-00
Feb-0
1
Apr-01
Jun-0
1
Advised Sales per FTEA
dvi
sed
Sal
es p
er F
TE
/Mo
nth
($0
00s)
200
300
400
500
600
700
800
900
0ct 9
9
Dec-99
Feb-0
0
Apr-00
Jun-0
0
Aug-00
Oct-00
Dec-00
Feb-0
1
Apr-01
Jun-0
1
Advised Sales per FTEA
dvi
sed
Sal
es p
er F
TE
/Mo
nth
($0
00s)
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Adviser productivity is top tierAdviser productivity is top tier
Planner productivity ($m per planner)
$m
Source: Plan For Life & Salomon Smith Barney estimates
0
1
2
3
4
5
6
WBC CBA AMP ANZ NAB AXA
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Products - Focus on ‘wrappedProducts - Focus on ‘wrappedofferings’offerings’
Institutions
Middle Market
Small Business
Private
Priority
Personal
DiscreteMandate
BusinessSuper
RetailProduct
MasterTrust
MarginLending
Custody
PooledFunds
Product/Service Distribution Segment
Indiv. Mgd Portfolio
InstitutionalSales
Westpac BFAs
WestpacAdvisors
WestpacPlanners
IFAs
HPJDV
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Sound retail funds performanceSound retail funds performance% of Funds Meeting or Exceeding Peer Group Median
0%
20%
40%
60%
80%
100%
Aug-99 Nov-99 Feb-00 May-00 Aug-00 Nov-00 Feb-01 May-01 Aug-01
55%Equal
4th
0%
20%
40%
60%
80%
100%
Aug-99 Nov-99 Feb-00 May-00 Aug-00 Nov-00 Feb-01 May-01 Aug-01
55%Equal
4th
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Looking closer...Looking closer...
1 year 3 years Trend% %
ING 79 60First State 68 78AXA 56 0Westpac 55 38CBA 55 70AMP 44 61NAB/MLC 42 50ANZ 38 50
Source Morningstar, Open Funds >$10m, June 2001
% of Funds Meeting or Exceeding Peer Group Median
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Westpac Investment ManagementWestpac Investment Management
• Focused on core competencies:
• Australian shares
• Australian fixed interest
• Tactical asset allocation
• Low cost, scalable operation
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Growth initiativesGrowth initiatives
• Maintain superior fund performance
• Source best of breed products
• Create alternative distribution models
• CRM/Leads management
• Grow sales force & upgrade skills
• Upgrade software tools
• Upgrade Master Trust platform
Servicing &Processing
InvestmentManagement &
Products
Distribution/Retail Service
Advice
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•• The changing landscapeThe changing landscape•• Banks’ positioningBanks’ positioning•• Wealth management value chainWealth management value chain
•• Sales & distribution Sales & distribution•• Product Product•• Investment management Investment management
•• SummarySummary
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AcquisitionsAcquisitions
• Not interested in profitless growth
• Must add shareholder value
• Watching brief
• Our strategy is not dependent onacquisitions
• Could accelerate achievement ofthe strategy
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Our wealth management strategyOur wealth management strategy
• Leveraging our comparative advantage
– large customer base, warm leads andreduced search costs
• Expanding distribution size andcapability
• Accessing & integrating ‘best of breed’products
• Balancing growth and profitable returns
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… and we have in place a high… and we have in place a highgrowth and high return wealthgrowth and high return wealthmanagement businessmanagement business
Source: Westpac Financial Services Group Statutory Accounts
90 101
254
149148
1997 1998 1999 2000 1H 2001
NPAT $m
29% CAGR* 195
Embedded value uplift * Excluding accounting impacts
90 101
254
149148
1997 1998 1999 2000 1H 2001
NPAT $m
29% CAGR* 195
Embedded value upliftEmbedded value uplift * Excluding accounting impacts
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