Branding business

With branding increasingly becoming a hot issue in the financial planning industry, it is it possible to sell advice in the same way as a McDonald’s hamburger or a bottle of Coca Cola?

With branding increasingly becoming a hot issue in the financial planning industry, it is it possible to sell advice in the same way as a McDonald’s hamburger or a bottle of Coca Cola?

A snap street survey would most likely show that most passers by could not name a fi-nancial planning group off the cuff. They may, however, make the mistake of naming a fund manager instead.

Many fund managers have been spending a small fortune on developing their brands. Merc’s red “M”, for example, has started taking on a personality of its own of late while recent advertising campaigns by Bankers Trust, Colonial, Norwich and MLC have been hard to miss.

But, when it comes to financial planners, the question, it seems, is whether such efforts are worth the bother.

Some players even believe that the nature of this industry renders brand development im-possible.

“It’s like building a house with sand,” says Paul Resnik Consulting Groups’ Paul Resnik.

“A brand should conjure up visions of consistency and encapsulate a series of certainties. You always know what to expect when you walk into a Pizza Hut or open a can of Heinz baked beans,” he says.

“I cannot think of a brand where you have individuals who run their own race and that’s what we do in our industry.”

Stewart Paul, a marketing consultant to the financial planning industry and author of bi-monthly newsletter The Marketing Reference Series, says: “Financial planners don’t have strong brands and they don’t spend enough on building them.

“The real reason for this is that financial planning is a one-on-one business. It’s more about personal marketing than big advertising.”

Jim Stackpool, a business coach and managing director of Strategic Consulting and Training (SCAT), concurs.

“There are a lot of good names in the business, but there aren’t a lot of good brands. Cli-ents are buying the person, not the brand,” he says.

Another reason for the industry’s lack of branding, according to Associated Planners general manager Andrew Creaser, is that financial planning is quite intangible.

“How do you know what a good financial plan looks like?” he asks.

Nonetheless, there are numerous pundits who believe that financial planners can certainly build their own brands.

“It’s possible. It just isn’t easy,” says Ipac chief executive Peeyush Gupta.

“We may not sell hamburgers but we can still be good at delivering a consistent experi-ence as a financial planning business,” Creaser says, but adds: “I don’t think that anyone in the industry has got this right yet.”

A number of financial planning groups have taken the many aspects of client contact and have tried to standardise these. They have, for example, introduced common telephone scripts, business models, documents, operating platforms and staff training.

Like McDonalds or Pizza Hut, the experience should be the same for clients whether they walk into the Darwin office or the one in Melbourne.

“We have tried to build a good brand through consistency in all our materials. We try and get everyone to use corporate standards when they do things like faxing a letter,” says Jacqueline Weiley, head of marketing and distribution services at Godfrey Pembroke.

While the brand battle is not being fought with advertising dollars, a number of groups are spending their money on regional TV, radio and print advertising.

They are also involved in sponsorships, fund raisings and have strong media relations drives to ensure their experts’ names constantly appear in the press.

Their efforts, however, are focused on reaching specific target markets.

“No one owns the market (when it comes to financial planners). There are only pockets that are recognised in their target markets. No one has done an exceptional job and some see it as unnecessary expenditure,” says RetireInvest marketing manager Lynne Wyatt.

Being part of an established and well-known brand can have drawbacks. For example, there is always the risk that someone else also operating under the brand may do some-thing to compromise it or that management might make strategic decisions which the planners do not agree with.

But there are many industry players who believe that building, and being part of, a strong brand is imperative — and will become even more so in the future.

For Godfrey Pembroke, the pay back for its brand building efforts has been the whopping $40 million, or so, that MLC paid for it.

In addition, brands must surely be of help to those who are up against large life and banking groups.

Gupta notes the funds inflow tables are now dominated by the large banks with estab-lished brands. In the year to March 1999, all the Big Four banks were in the top 10 and together, they captured 40 per cent of the funds inflow — a jump from about 10 per cent four years ago when there was only one bank in the top 10.

“The market for advice is growing overall, but in that, the branded companies are cap-turing a much larger part of the flow,” Gupta says.

“The issue for little companies is whether there will be much left over at the end of the day.”

No one disputes the fact that financial planning is a relationship business, but one first has to get people through the doors before one can establish that relationship. And, brands can help rope them in.

Weiley admits that some of her group’s advisers will say: “My clients buy me and not Godfrey Pembroke.” Nonetheless, she believes that both the reputation of the individual and the group are crucial parts of the mix needed to attract new clients.

A client survey done by Godfrey Pembroke a few years ago found that 50 per cent of its clients shopped around before choosing it and the other 50 per cent came though a per-sonal referral.

“Branding will become more important as people become increasingly time poor,” Wyatt says.

“They won’t have the time or desire to investigate 12 different people, which means that one will have to be up there among the one or two that they will bother to look at.”

Many recruits to the financial planning industry have been drawn from life or unit trust backgrounds — two industries that have historically revered the individual.

However, as existing planners move to retirement or take on new staff to help them with their burgeoning work loads, there is a need for change.

“A one man show can be a profitable business, but if you want to build it and sell it for a good price, you need to corporatise it,” Creaser says.

The problem for those who operate under their own name is that every new person who joins them has to start again from scratch.

This may not be the case, however, if the planner has introduced clients to other people in the company and has put effort into team building — and if the focus has been on creating consistent experiences which ensure that clients receive similar levels of service no mat-ter who they are dealing with.

Stackpool cautions: “Unless people build long term brands, they will always be chained to their businesses.”

He says many financial planners with good names grew their businesses by 40 per cent last year. “Their businesses have boomed, but they have a shocking lifestyle because they do not have any back up.”

For larger companies, adds Wyatt, it is much more cost effective to promote one brand, rather than 20 individuals in the same stable.

But it seems that the brand question depends on where a financial planning company is in its life cycle.

According to Wyatt, brands can help newcomers to the industry build up customer bases, but once advisers have lots of clients, the need for a brand diminishes.

Stewart Paul concurs. “A lot of financial planners do less brand building than they used to 10 years ago because they now have a large client base and gets lots of referrals, al-lowing them to close down on promotion,” he says.

The financial planning industry may still be in an embryonic stage of development, but according to Creaser, people are starting to recognise that advice is a product.

“It is important for financial plan