As reported on Good Returns today SBS’s subsidiary FANZ is splitting its business into advice and product manufacture. KiwiSaver sits in the product area, and its advisers will have an approved product list.
We are lucky in New Zealand that the banks’ wealth models are not as highly integrated into advice as they are in Australia. (Although they have proved to be experts at switching customers into their own KiwiSaver funds).
A view I have heard a number of times is that banks don’t actually know how to run, and shouldn’t be, in the wealth business. The most telling time I heard this was from someone who set up and ran a funds management business and later on ended up running wealth within one of the banks.
My own experience recently with ANZ has been a classic example of sales. Our account manager put pressure on us to come and review the life and medical policies we held (and bought through an adviser).
It was no surprise that his recommendation to us was replace everything with OnePath Life products and nib Health products. (ANZ and nib have a distribution deal). No product comparison, or anything like that.
It will be no surprise that his “advice” was not accepted.
I often hear the argument that if you go into a Toyota dealership you fully expect to leave with a Toyota rather than a Ford. That is then extrapolated that if you go into a blue bank, you expect to leave with a blue bank product.
Where this argument falls down is that it fails to address the all-important client's best interests test.
Partners Life managing director Naomi Ballantyne summed things up well at the recent Kepa conference. If banks withdraw from the wealth space it creates a bigger opportunity for independent advisers as that "does not change the number of clients that need protecting, it just increases the opportunities for those that are left."
But the caveat is the remaining advisers and product providers needs to be more efficient and look at doing things differently.
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