Wealth Management

Errol Woodbury, principal of Woodbury Financial Services, which is licensed under our Garvan Financial Planning business, helps a client fulfil her financial needs.

Since 2001, our profits have been impacted by a downturn in investment markets and increased regulatory and compliance costs as a result of a number of regulatory change projects and a heightened focus on our compliance and risk management systems.

In addition, a matter involving unit pricing errors resulted in compensation payments to investors of approximately $68 million. (In 2002, we committed to compensate investors in a number of National Australia Financial Management Limited products that were adversely affected by October 30–31 2001 unit price reductions and two associated historical unit pricing errors. We have continued to work with the Australian Securities & Investments Commission and the Australian Prudential Regulation Authority on remedial actions to resolve this issue.)

In 2004, Wealth Management achieved a net profit* of $425 million, which represented a significant increase of $251 million above the previous year.

We are the largest provider of investment platforms in Australia, with $38,000 million on our MasterKey and MasterKey Custom platforms and 17% market share (Plan for Life Australian Retail & Wholesale Investments Market Share and Dynamics Report, June 2004).

We are a major provider of retail life insurance in Australia, with a 13.6% share of annual new individual risk business premiums and a 15.1% share of in force annual premiums (DEXX&R Life Analysis, June 2004).

We retained our strong presence in Australian Corporate Superannuation, with 18.9% market share (Plan for Life, Market Share and Dynamics Report, June 2004).

During the year the Group acquired a strategic stake in AMP Limited prior to the demerger of its UK businesses. While this resulted in a 5.4% holding in AMP (when aggregated with the Group’s existing holding through its wealth management operations), this was below the holding size we had sought. After AMP’s demerger, the strategic value of the holding was reassessed and sold in January 2004.

We implemented a quality advice program in our National Australia Financial Planning business, lifting revenue and productivity and increasing monthly customer referral numbers substantially in 2004.

Our salaried and self-employed, aligned advisers in Australia attained Advanced Diplomas of Financial Services. More than 40% are now accredited as Certified Financial Planners.

IFA Magazine’s Best Practice of the Year Competition awarded first place to Haintz Financial Services, an independent practice with a strong relationship with MLC. Woodbury Financial Services, which is licensed under our Garvan Financial Planning business, received second place.

We made it easier for customers to access debt solutions through their financial adviser, with debt sales reaching $1,500 million in 2004.

In the Private Bank we launched a program to deliver premium service and advice for high net worth clients, focusing on customised solutions and flexible relationships.

We simplified our Wealth Protection processes, making insurance more accessible to National customers. This included the development of MasterKey Protection Essentials, a protection offer with a simplified application process, integrated into our investment superannuation platform.

Our UK operations launched the MLC Personal Pension Plan to external financial advisers, extending access to our multi-manager investment process in that market.

Staff at MLC's North Sydney office work in a relaxed, open environment.

We completed the sale of our UK life insurance subsidiary, National Australia Life Company Limited, in order to focus on customer relationship management and distribution, rather than product manufacture.

We also formed a strategic alliance with AXA to offer commercial insurance to business customers of the National’s UK banks.

In Asia, China represents a new wealth management market for us, and we opened a representative office in Beijing to test the market and scope opportunities.