Bank on benefits for everybody

The question “are banks a threat to your business” (Money Management Adviser Feedback March 18) is essentially asking whether banks will be a viable competitor and steal market share from financial planners. I think the question is somewhat misleading.

Banks are not out to take financial planners' traditional clients. Banks have, as their major focus, a different market. Our focus is to offer our customers convenient access to total financial care.

These customers have traditionally believed financial advice is reserved for those who are perceived to be already wealthy, such as those who have a rollover, retirement or redundancy need. These customers are, in the main, those who are not profitable for financial planners to have as clients. These customers need not only investment, but insurance, superannuation and retirement advice. Banks are proactive in creating a need for financial advice with an investor that has previously not accessed this service.

How are banks pro-active? We do not wait until a customer has retired or been made redundant. Rather, banks see providing financial advice as part of their total financial care service.

When a customer walks into a branch they are offered an opportunity to sit down with a financial adviser. And they are responding. Assirt's market share report for 1998 shows the four major banks raised $6560m in net funds flow, accounting for 40 per cent of the total net funds inflow of the entire industry. Nearly 60 per cent (58.1 per cent to be precise) of these inflows have gone into cash and cash enhanced products. For many customers, this is the first time they have put money into a non-bank savings account. They are seeking better returns but are not yet comfortable with growth assets. This is often the first experience of the benefits of financial advice these investors have, and leads to greater demand for further advice.

Banks are in a unique position to help middle Australia not only grow, but protect their financial assets. We proactively offer advice on insurance protection as part of our total financial care.

The bank's brand and distribution advantages create a number of benefits.

Firstly, banks are creating a new demand by proactively asking customers not already accessing these financial services about their financial needs, not just offering rollover and retirement services.

Secondly, banks offer customers the opportunity to grow wealth through access to managed funds, an opportunity these smaller investors have not considered available to them in the past.

Thirdly banks are increasing their focus on the life insurance market, encouraging customers to protect their largest asset; their future income.

The more bank customers learn about the opportunities to invest, either for wealth over the long term or in superannuation and retirement, the more their demand for these services grows, to the benefit of the whole industry

We are all aware of the massive growth potential of the financial services industry in Australia. In fact, recent projections indicate the industry can grow 12 per cent plus over the next 10 years.

Financial advice is like anything that is new - the more people learn about it, the more educated and knowledgable they become, the more the demand for advice will grow.

Banks are working to service a different part of the market. By throwing the weight, infrastructure and client bases into the mix, banks are helping more Australians create wealth, fund their retirement, protect their assets and generally be more prosperous in the future. There is room for all of us in this rapidly growing industry.

<I>Brett Himbury is head of business development at Westpac Financial Services.