4 Comments 4 Commentsby Susan Edmunds
Grant Gilbert said because banks were increasing their advice offerings, it was no longer always necessary for customers to seek independent mortgage or investment advice.
He said ASB had increased its wealth advisory network.
It is also increasing its lending advice numbers and will soon have 50 or 60 staff working on videophones, providing advice to customers when there are no advisers available in the branch.
The bank was the first point of call for financial services for many of its one million customers, he said. “Not all of them come to us but we are sending these people anything from a statement to proactively interacting with them.”
Financial adviser Jordi Garcia said only a small number of his clients inquired as to whether he was independent. “I suspect that the more affluent they are, the more important independence may be.”
He said it was likely no more than a quarter of advisers were not aligned with one institution or another.
Banks would likely build their financial advice offerings, he said. “It’s the way of the future.”
The focus on KiwiSaver, which was a low-cost, commoditised product, would work in the banks’ favour, he said.
It has been suggested that the small numbers of independent advisers – who often tended to be much older on average than the rest of the sector – was not an issue because bank staff would choose to strike out on their own later in their careers.
But Garcia said that was already proving to be easier said than done for many of them.
His firm has been approached by bank advisers many times over recent years. “They think they can do better or earn more working for themselves.”
But he said remuneration was always the stumbling block. Used to a $80,000 or $100,000 bank salary, they were not willing to move to a role where they would not be paid.
Garcia said it usually took three to five years for advisers to get to a reasonable level of self-sufficiency and build up enough customers to earn $80,000 or more. “That’s a long lead time so that’s a stumbling block for bank-based advisers.”
Firms were not keen to pay new advisers during that time because there was no guarantee they would stay, and if they left, they would take 90% of their clients with them, he said. “To build up takes time.”
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