Every bank left financial planning in the wake of the Hayne Commission leaving a lot of money on the table to remediate clients for poor financial advice. Have the risk/reward dynamics improved in such a short time to tempt them to return?
Deloitte’s Mark Ryan remarked at the Stockbrokers and Financial Advisers Association (SAFAA) Conference in Sydney this month that it was a question of “when” the banks would return to Wealth rather than “if”. Now might be a good time.
Firstly, they have an enviable book of customers independent financial advisers (IFAs) could only dream of. They also have a great mobile phone app and a professional web site that can transact and inform.
Secondly, the pandemic may have made it easier for them to make a dollar. Remote advice is cheaper than face-to-face advice and the Direxion Work From Home Survey found client relations were either unaffected or enhanced by remote advice.
Banks have great infrastructure and clientele, they just need a new business model and a “tiered” system may be the way to go. David Haintz in his article “Tiered offerings: The three-legged stool” argues that “under the fee model, advisers who segment their clients can personalise their service, increase efficiency, generate faster growth and improve profitability”.
Tier one could be free and include a financial health check on the bank app. Tier two could be remote advice which the pandemic has turbo charged. AMP already offer phone-based advice and there has been a proliferation of “work from home” tools. Finchat have a suite of tools designed specifically for remote financial planning. Tier three could be face-to-face advice, tier four wholesale clients and so on.
IFAs struggling to survive may dust off their CVs. Banks generally pay well.