Relationship ethos drives bush business

Bendigo Investment Services is looking to build from Bendigo Bank’s grass roots base in the bush to a fully-fledged financial planning group. John Wilkinson explores the ethos of the fledgling group.

Bendigo Investment Services is looking to build from Bendigo Bank’s grass roots base in the bush to a fully-fledged financial planning group. John Wilkinson explores the ethos of the fledgling group.

Bendigo Investment Services (BIS) is a joint venture formed last year by IOOF and Bendigo Bank as part of a move for greater co-operation between the two Victorian financial services groups.

Its aim is to provide financial advice to the customers of the Bendigo Bank, which is fast-becoming a national operation through its community banking ventures.

BIS general manager Gary Kilburn says there are 480,000 bank clients and he admits his 18 advisers are going to be pushed to contact each one of those potential clients.

“If we work very hard we might get to see 15,000 a year,” he says. The systems BIS has in place, Kilburn says, would allow the number of advisers to expand to about 50 without altering the technology.

BIS only opened its doors last August, but it had the advantage of building a financial planning company from scratch and did not have to worry about previous systems and cultures.

BIS has adopted the Bendigo Bank philosophy. “It is a relationship-driven organisation with a high level of customer care,” says Kilburn.

This becomes even more important with a client base mainly based in the bush. Word spreads quickly if something goes wrong.

“The client base is 18 upwards with a high proportion in the bush. They have saved and many are approaching retirement,” he says.

Many of the BIS clients come from the community banks, which are a partnership between Bendigo Bank and the local community. These started in rural Victoria and have spread to metropolitan Melbourne, New South Wales and Western Australia.

Kilburn says BIS is being approached by younger people who have a mortgage and are looking to improve their cash flow.

The bank has 85 branches and each BIS adviser looks after between four and five branches in a geographical spread.

“The adviser sets the days when they attend a particular branch,” Kilburn says. “The bank staff feed the adviser with potential customers, but the challenge for the adviser is setting the service levels for that particular branch.”

The advisers generally talk to clients about superannuation, managed investments, DSS and risk solutions. Products like mortgages and credit cards are referred back to the bank to deal with.

Advisers working in the field take down the information from clients on a Financial Needs and Goals document. This has been designed from scratch by BIS. Clients are required to sign some parts to say they have been told of risks or that they refused to supply certain information. Kilburn says the document conforms to a lot of the CLERP recommendations.

The Financial Needs and Goals document is sent electronically to BIS head office in Melbourne for checking. Because the form is stored electronically, copies can be printed for clients locally.

“It is a seamless process,” Kilburn says. “It allows us to run back-office integration that can cross borders.”

The Financial Needs and Goals document also plays an important role in the compliance process.

Every plan is checked by a business review manager based in Melbourne. If the plan is modified, or there is an omission, such as a client not signing some part of the form, it is sent back to the adviser and the fact is noted in the adviser’s review process.

“We are in the business of increasing people’s skills and this process allows us to look at any areas of the adviser’s skills that might need improving,” Kilburn says.

The advisers have a rating system of A to D and are rated on a monthly review of their performance. If the advisers has an A rating, only one in five plans are reviewed.

“The process makes the adviser feel more confident about what they are doing,” Kilburn says. “Compliance is then used as a personal growth tool.”

“Compliance is not a policeman role, it is there to help the adviser to become more proficient — and that benefits the client.”

If an adviser achieves a C rating, every plan is reviewed and counselling will take place on how to correct the deficiencies. Kilburn says if an adviser achieves a D rating, then almost every aspect of their work would need to be worked on. Anybody with a D rating is unlikely to be employed for too long at BIS. Kilburn says the firm is ideally looking for advisers that can achieve A and B ratings, with the possible few achieving a C rating temporarily.

“We hire experienced planners, although we don’t rate them for the first two months they work here,” he says.

“They need the opportunity to understand the paperwork and how our systems work.”

So far, about seven of the 18 advisers at BIS are A-rated and Kilburn says in the six months the company has been operating, it hasn’t received a single client complaint.

Because the rating system is constantly reviewing the adviser’s progress, training is provided to solve problems that have been identified during the reviews. “If someone is making a technical error, we can pick it up early through the review process and correct it quickly,” he says.

The consistent approach to advice also brings benefits to the clients Kilburn says. The advisers can be seen to be adding value due to the high quality of the financial plans they prepare.

The company has been developing its own systems from scratch and has been able to create sophisticated performance-monitoring programs. Every referral is entered into the system and the strike rate is recorded.

“We know where each enquiry came from and can follow it through all stages until it is either a sale or not taken up,” Kilburn says.

BIS has been scoring a strike rate of 68 per cent, compared to world’s best practice of 55 per cent.

“It shows the quality of the advice we are giving to clients,” Kilburn says. “And this is in our first year as well.”

Despite the initial success of BIS, Kilburn admits the hard part has been trying to find the right type of adviser to join the company.

The average age for advisers at the firm is about 30, but Kilburn admits they will take people up to 55, if they have the right skills.

“What we want is people who have good inter-personal skills and the ability to work in a business that is multi-disciplined,” he says.

“The adviser needs life experience, with good technical skills. They must be willing to qualify to CFP standards.”

All advisers are salaried. Depending on achieving certain performance levels, they have the ability to take equity in the company.

While there is a list of nine product providers, including IOOF and the bank’s own products like the Sandhurst Mortgage Fund, the advisers have no compulsion to use them.

“We have no product bias here,” Kilburn says. “It doesn’t matter who the product is from, if it is the best solution for the client, we sell it.”

This independent approach also means business development managers are barred from talking to the advisers and the company does not accept offers of overseas study trips from fund managers.

“We don’t want people who just sell product,” he says.

The future of Bendigo Investment Services is one of expansion as the bank branches grow. The company has just moved to bigger offices in Collins Street, and now is hoping to find the right sort of adviser to join this innovative firm.

Bendigo Investment Services

Vital statistics

Advisers: 18

Funds under administration: $172 million

Ownership: 50% Bendigo Bank, 50% IOOF

Founded: August, 1999

Key figures: Gary Kilburn, general manager

Master trust: IOOF

Research: Winchcombe Carson’s research team

Last conference: No plans to hold conferences