Is CBA Private Advice really on the sales block?

The Commonwealth Bank is yet to formally confirm continuing news reports that it intends to sell its Private Advice business.

The reports published in the Australian Financial Review, have suggested that the Commonwealth Bank has mandated Gresham Capital Partners to oversee the process.

If the CBA confirms the reports, then it will be vacating what many continue to see as the most lucrative segment of the wealth management market and one which has been substantially less problematic than those which the major banks have exited over the past four years.

The perception has been that while the banks have all exited their planning businesses such as Count Limited, Millennium3 and MLC Wealth, they had nonetheless retained premium elements via their private banking businesses.

The private banking businesses have been a more attractive segment because, for the most part, they involve “sophisticated” high net worth investors meaning that the wholesale advice is not subject to the same exacting requirements as the retail advice.

However, the Government generated an element of concern around the future of wholesale advice by canvassing changes to the wholesale and investor and wholesale client tests.

The Australian Banking Association reflected the broad views of the major banks when it recommended grandfathering of arrangements for existing clients, noting that banks deal with wholesale customers on an ongoing basis.

The income and wealth thresholds utilised by CBA and the other banks for accessing their high net worth services are such that any changes to the sophisticate/wholesale investor tests would likely have negligible impact.

While CBA is reportedly considering the sale of its Private Advice business, National Australia Bank (NAB) continues to offer NAB Private Wealth “in collaboration” with JB Were and nabtrade, while Westpac utilises Westpac Private Bank.