Which bank makes it happen in planning.
Supplying the right financial services to each client is not always a simple task, especially when the client base numbers in the millions. Jason Spits looks at how the Commonwealth is tackling the task of supplying financial planning to its vast range of customers.
The push by the banks into providing financial planning has been underway for some time and based on the numbers of planners devoted to the task by the Commonwealth group, it is a serious and long term approach.
Having said that clients approaching the Commonwealth for financial planning can expect to come across one of three planning arms - Commonwealth Personal Bankers, Commonwealth Financial Planners and Commonwealth Investment Consultants.
According to chief manager for advice and information Steve Cullen the tactic has been to adopt a tiered approach to giving advice, dependent on the needs of clients at various stages in their lives.
As such the 600 Personal Banker advisers are primarily part time advisers drawn from the body of existing bank staff and are limited to giving advice on amounts up to $50,000.
"We have intentionally restricted the levels of complexity involved and work on an events basis, tied into a range of Commonwealth products. These planners exist to meet a gap the market does not fill, the lower net worth client," Cullen says.
"We wanted to be able to pick up clients at the beginning of the creation of nay strategy. If these needs are not met at the start of wealth accumulation strategy by the time the client is halfway to retirement there are more problems to consider."
The next tier of Investment Consultants is a more applied model of the Personal Bankers with advisers employed full time and advising mainly on Commonwealth products. However the product offering is expanded to include a master trust with a variety of product providers within that.
According to Cullen the 220 Investment Consultants are still event based advisers and do not provide a holistic planning service to clients but are there for clients seeking a broader suite of products.
"The Investment Consultants would ideally work with people who have more knowledge and are looking for other ways to invest such as superannuation, life insurance products and direct shares," Cullen says.
These advisers are also located in branch offices, normally set aside from the regular banking staff and would service a group of branches within a region and used as a regional resource.
The third tier, the Commonwealth Financial Planners, is also the newest and is being rolled out at the time of writing after a successful pilot program.
Twenty one full time planners are involved so far and will service people seeking an even greater choice and range over their investements according to Cullen.
"These people have greater funds and have already set large lifestyle goals with more diverse needs and we aim to ensure we provide on-going coaching to reach the chosen outcomes," Cullen says.
"This is something we are excited about and we have received positive responses after a lengthy two year pilot program. We feel good about the ability to provide access to alternative fund managers and to meet the need for on-going advice outside an events based strategy as sometimes that fell short."
The new tier will deal with clients in Sydney, Melbourne, Brisbane, Perth and Newcastle to start with before being applied in other centres.
At the same time Cullen is also mindful of having to integrate a number of planners from the operations of Colonial First State into the three tiered system favoured by the Commonwealth.
"The Colonial planners are employees of the group and work through two channels, a junior and senior channel with 144 planners in total. Hopefully these will fit in with our Personal Banker and Investement Consultnat channels," Cullen says.
"They are also event based with similar experience levels and skills and so we have yet to see it as anytnhing but complimentary to our own business. In fact the coming together should be quite easy due to a consistent approach on both sides."
Apart from the Colonial planners coming onboard most recruitment to the planning arms is internal with Cullen stating the move up through the bank system has created an invaluable career stream for the future.
"Banks are a service industry and that's why we see it as a fantastic nursery to move potential advisers through the various channels and have them learn the business as they proceed," Cullen says.
"It is important to learn service alongside such areas as commitment to the job and an ethical, professional approach. External recruits must have the same approach so clients have the same experience every time of a brand that is consistent with their needs."
Since all three channels are closely tied to the bank advisers are salaried but those acting full time, the Investment Consultant and Financial Planning arms, are also paid bonuses.
"This was a conscious decision we made based on the type of business and the client base with whom these advisers are dealing," Cullen says.
"However this is tempered with the need for performance elements which are based on targets, not the selling of products, which is more compatible with what we do. We don't feel this is wrong as advisers are normally performance driven but we also base that around education and compliance."
Education entails six full days of training per year for each adviser regardless of what channel they work through and ten days for the more senior planners.
At the same time there is a push to have all planners and advisers gain the Diploma of Financial Planning (DFP) but Cullen says with a large network and some turnover this is proving to be a challenge.
"To get into the senior ranks, that is to be promoted, advisers in the group need the DFP. It does create a strong incentive to be promoted as there are salary jumps for those who have completed the DFP and gained the Certified Financial Planner (CFP) designation," Cullen says.
All advisers are run through the first unit of the DFP program internally before slotting into the external program which is paid for by the Commonwealth group as part of each adviser's professional development.
The group also has 50 full time paraplanners, a dedicated helpdesk for advisers and a compliance unit to vet advice as well as a series of referall cells in Sydney, Melbourne and Brisbane.
"These are part of a basic screening process, which works in conjunction with the bank staff, to direct clients to the correct channel for their needs," Cullen says.
"It basically helps free the adviser from having to chase appointments and service people outside their area of expertise."
The research gathered from Morningstar, Assirt and van Eyk is also channelled through an inhouse group to ensure it meets the needs of the advisers in each tier.
"We tend to distil research and create formats applicable to the experience levels of clients and advisers," Cullen says.
The group also has its own research capabilities according to Cullen, which it uses with the external research to assist in creating products or focussing on a particular customer segment.
Part of this research is also being used to complete the merger of the two master trusts held by the Colonial operations with the single master trust of the Commonwealth.
"Our prime focus ad been member choice in superannuation and even though it was built for this, advisers have been using it as well. The view now is to produce a master trust which will offer far more access and service at the end of the integration," Cullen says.
Looking past that time Cullen says the long held plans will continue to focus on a wider and stronger presence for each planning channel with significant expansion slated for the senior channel.
On the other hand the junior channel, the Personal Bankers, has reached sufficient mass according to Cullen and will be reviewed to see if a shift to becoming full time advisers will be beneficial.
"The plans we have for the financial planning arms are designed to be quick moving. It is not our objective to keep this a slow process and so we are looking at moving forward and making some large decisions," Cullen says.
"But we are still aiming at making the experience of our clients a consistent experience with people they have come to trust."
Name: Commonwealth Personal Bankers
Commonwealth Investment Consultants
Commonwealth Financial Planning
No. of advisers: CPB - 600
CIC - 220
CFP - 21
Ownership: Commonwealth Bank of Australia
Research: Assirt, Morningstar, van Eyk
Funds under Admin:
Wrap/Master Trust:
Key Figures: Chief manager for advice and information Steve Cullen.
General manager personal customers Graham Carney
Head of research Justin Callins
Last conference: Coolum.
AUTHOR
Jason Spits
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