Adviser Feedback – 18/03/1999

Are banks a threat to your business?

Banks seem to be less customer-oriented than financial planners. I was listening to a radio program on Saturday morning with Kevin Bailey on it, and a woman called and said that her bank had rung her to tell her that she should be doing something else with her money. This was the first contact she'd had with her bank in 20 years, and she felt it was an invasion of her privacy. The scenario rang a few bells as I've had a client in a similar predicament before. My client eventually gave in to the bank and invested her money into a very large managed fund, which was not flexible to her needs.

Therefore, I'd have to say that I don't see the banks as a threat as they don't offer the service that financial planners offer, although they are getting better.

Financial planners are better versed in equities and as opportunities arise for clients in this regard, the bank wouldn't be available outside of 9 to 5 to deal with this.

Eric Estlin, principal consultant, Godfrey Pembroke Limited, Melbourne

The banks probably have an advantage due to their large customer base and their access to clients for cross-selling purposes, but I don't think financial planners will necessarily be disadvantaged.

Most clients are wanting personalised service, which the banks are not necessarily giving. For example, the banks are centralising their administration and are introducing 1 300 numbers and this is a move away from personalised service.

Also, people are now distrusting banks - an example of this is the banks closing down of country branches. I think many people would worry about the banks' ability to put them before profit.

But the banks do have a technical advantage over smaller financial planning organisations as far as critical mass goes. The banks can send mailouts to a huge market and they have the money to do this.

I see the banks as a partial threat, but I think we are advantaged because of our individuality and our ability to deliver service on a one-to-one basis.

Paul Halligan, authorised representative and CFP, MoneyLink Financial Planning, Mt Gambier SA

I believe generally that there will be a polarisation of the industry into big, large networks/dealerships with the economies of scales, data/customer bases, client loyalty programs and especially well recognised brand names at one end, and boutique, smaller personal, more individually service-orientated operations at the other.

The first group will satisfy a lot of clients who are looking for security of brand name, size and convenience, who are prepared to accept a less personalised, more standardised approach.

The second group will satisfy those clients who go to the cornershop rather than Woolworths 'because they know my name', whose main requirement is for either personal, individualised service, or something specialised or unique. Banks obviously will form a major part of the former.

The effect of this polarisation will depend on the planner's positioning, adaptability and their ability to communicate that positioning in the market (ie are they part of the big process or what is unique about them?).

Ian Pavletich, proper authority holder, Hillross Financial Services, Sydney

Financial planning is all about relationships. The banks no longer have any particular competitive advantage in client relationships over financial planners.

I see banks as another competitor without any particular advantage.

There was a time when we thought they'd be a threat, but now I think a national bank has to work just as hard to get their customers to see their financial planner as any financial planner does.

I have a better relationship with a checkout operator at Woolworths than I have with banks. People don't go into banks any more.

In terms of what they do, I doubt that they have an extra advantage either.

People offering financial planning should not be worried - they are offering the same services. In some way financial planners for banks can be hamstrung in the sense that they may become product salesmen for the bank and their business may become a volume business.

David Middleton, director/private client adviser, Ord Minnett, Adelaide.