Commonwealth Bank has confirmed it will close Financial Wisdom. It will also allow Pathways advisers to commence transitioning elsewhere.
Releasing its full year results today, the bank has confirmed it will commence the assisted closure of Financial Wisdom. It has also decided to allow CFP-Pathways advisers to commence transitioning to self-licensing arrangements or move to another licensee.
In doing so, Commonwealth Bank will have exited all of its aligned advice businesses, having announced the sale of Count Financial to CountPlus in June.
As at August 1, there was 317 advisers licensed by Financial Wisdom.
The bank intends to cease providing licensee services through Financial Wisdom by June 2020 and will then proceed with the closure.
Commonwealth Bank cited the Royal Commission and structural changes in the advice sector as key drivers behind the decision.
Advisers will be supported through an orderly transition to alternative arrangements, including self-licensing or joining another licensee, the bank said.
"The estimated pre-tax costs of supporting the Financial Wisdom and CFP-Pathways businesses, their advisers and their customers through this transition, as well as other internal project costs, is approximately $26 million," Commonwealth Bank said.
Its results show that in FY19, excluding remediation provisions, Financial Wisdom and CFP Pathways incurred a post-tax loss of about $11 million.
Remediation for customers of Financial Wisdom will continue, managed by Commonwealth Bank.
The bank noted in its results that agreements pre-dating 2013 allow Financial Wisdom advisers to exercise a Buyer of Last Resort provision but no applications have been received to date.
"It is not currently possible to reliably estimate the financial impact of these agreements," Commonwealth Bank said.
Meanwhile, the sale of Count Financial was overwhelmingly supported by CountPlus shareholders at an extraordinary general meeting in Sydney yesterday. The vote to acquire the business saw 99.76% in favour of the decision.
The $2.5 million transaction is now expected to be completed around October 1.