Financial service products are becoming more like consumer goods these days as brand becomes more important to the consumer.
Colonial First State Investments (CSFI) Australian based managing director Peter Polson says that is one of the reasons why his group has been absorbed into the ASB Bank-owned Sovereign in New Zealand.
Polson says best of breed is no longer good enough in the market place, "best of brand" is what it's about.
"You've got to be a recognised brand - that is the logic of what we are doing."
ASB Bank outgoing managing director Ralph Norris says consumers are now looking for the reliability and security of brand.
He says there will be further rationalisation in the financial services market as the smaller players struggle.
(Commonwealth Bank, which owns many brands including ASB Bank, Sovereign and Colonial, is now the largest diversified financial services company in Australasia).
Norris says with all the acquisitions CBA has made it was time to start rationalising the brands.
While there are no plans yet for just one brand that is likely to happen.
"There will obviously be a move to an umbrella brand at some time," Norris says.
Polson says it makes sense for CFSI to get out of the distribution game and hand that side of its business over to Sovereign.
"We just could not compete in the distribution sense. For us spending a whole lot of money building another retail brand in NZ when Ralph (Norris) was already running two of the premium retail brands would be crazy."
However, he says that CBA buying Colonial and putting everything together was a good move as it allows them to clip the ticket in another way.
That is it now has a specialist active manager (CFSI) and a specialist passive manager (Commonwealth Investment Management) to manage funds.
He says Commonwealth will continue with all the styles, active, passive and multi-manager.
Under a rationalisation announced in June CFSI will concentrate on the corporate markets and provide investment management for products distributed by other parts of the Commonwealth Group in NZ. CFSI's retail funds are being rebranded and sold under the Sovereign logo.
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