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ABC program highlights the key difference between bank financial planning and boutique financial pla
Team Maddern
12/May/2014

Those of you who viewed the Four Corners program “Banking Bad” last Monday night would be rightly horrified at the product-focused culture exposed within one major Australian banks’ financial planning arm.

One journalist commented that “Every time the light is shed on this organisation, it seems, it spots a cockroach scuttling away to the safety of the darkness”.

This bank is only one example of the product-centric Key Performance Indicators that the banks and dealer groups place on their advisers. When another well known Australian banking name announced their bumper profits last week, their financial planning and investment arm highlighted their contribution to these profits with a media release focusing on Funds under Advice, Market share, Funds under Management. No mention at all was made of client retention rates, clients achieving their goals or new client flows from existing referral networks, nor measurement of the delivery of levels of Advice or Strategy.

With these sales measurements in place from the top down, we should not be surprised that client goals are not the first focus of many dealer groups and banks. This is not to say that the individual advisers are not driven by client goals, but when senior management’s objective is to build platforms and market share it makes it very difficult to recommend anything outside of the banks scope of products, and provide the client with something that is tailored to them. Simply ask a bank or dealer group if you can check their Approved Investment List, it will built on, you guessed it! The banks’ own products.

Having only ever worked for independently owned Financial Services companies, this culture is far removed from anything I have ever been exposed to, save and except for clients who come to us in flocks from these organisations, burnt by their ‘XYZ managed fund’ or ‘ABC mortgage fund’.

Our business goals are focused on gaining referrals from existing happy clients, completing regular reviews of our clients’ portfolios to benchmark their objectives and providing feedback and strategies to improve their position. We very rarely measure Funds under Advice, never track market share and the only trips we take are to St Kilda beach for a BBQ. There are no incentive trips to New Zealand and no push to achieve a certain Funds under Management level before the end of financial year. Retaining our clients is the number one priority of our firm, and to do this we must continue to achieve and over-deliver value to them.

Pleasingly, the majority of our firm’s growth stems from new clients who are looking for a non-conflicted financial adviser, product is secondary for us. What we really focus on is strategy and achieving the right fit for a client.  We are paid based on a fee-for-service model which is outlined from the outset, transparently disclosed and directly linked to the service provided.

As members of the Association of Independently Owned Financial Professionals (AIOFP), we have met many other Advisers along the way who also subscribe to this business model and pleasingly our association is growing. Our code demands a culture of client focus and we are united in our resolution to achieve this.

Rest assured, that whilst the Four Corners report served to further expose the undertone of sales in banks and dealer groups, it also highlighted how different we are.

Happy clients are our top priority.