Bank on four challenges ahead

Bank based planners have enjoyed particularly strong business growth in recent years, writes Michael Migro And although this will continue in the year ahead, they face four significant challenges in 1999.

Leveraging community interest in advice

Research commissioned by the FPA shows financial planners remain the preferred source of investment advice, ahead of alternatives like accountants and family members. This is a tremendous opportunity, but the challenge for planners is to be identifiable, accessible and recognised by customers as adding value to their financial plans. The retail franchise enjoyed by bank-based planners gives them a distinct advantage: awareness of banks is high. And regardless of people's feelings about banks, they trust them and their staff, including planners, with their money.

Building and sharing knowledge

The challenges of legislative change for planners is twofold. First is the need to keep abreast of technical issues to best meet client needs, which requires commitment by the individual and support from institutions to build that knowledge. In the last ASSIRT Service Survey, planners rated technical support a major issue they had to contend with.

Second is to share this knowledge, and the recent 'September 20' changes are a good example. Extensive training was required to bring planners up-to-date on the changes and whom they would affect, and bank-based planners could share this information by accessing the databases of their institutions.

Achieving further efficiencies

Multi-channel distribution and e-commerce herald greater investment choice, lower distribution costs and margin pressures. Now that investors can buy a $100,000 portfolio on-line for $24, planners must either add value, reduce price or both. T do so they need economies of scale and significant infrastructure support.

Bank-based planners enjoy strong technological support and, most importantly, a referral system that lets them do what they do best: meet with clients to help them achieve their financial goals. Bank-based planners can spend more of their time on high-value activities - their challenge this year will be to extend this advantage.

Accessing the business market

Superannuation investment choice is progressing despite legislative delays, offering financial planners increased opportunities in the business market. Small- and medium-business owners require assistance and advice to deal with choice issues. While bank-based planners have enjoyed strong support from their retail network, their challenge now is to build support amongst their extensive business markets.

<I>Michael Migro is head of retail and business customer management, Westpac Financial Services.<B>