The financial institutions have emerged as the dominant players in the financial planning industry as they attempt to corner customers across the whole spectrum, from the “rats and mice” to the seriously wealthy.
The financial institutions have emerged as the dominant players in the financial planning industry as they attempt to corner customers across the whole spectrum, from the “rats and mice” to the seriously wealthy.
“They are all trying to cut into the cake at multiple layers, to taste the cream at the top as well as the dough at the bottom,” says KPI Re-search’s Leo Wassercug.
The financial institutions own all of the Top 10 financial planning groups, with the exception of one: Count Wealth Accountants. And, when its comes to the Top 20, Professional Investments Services is the only other group to escape their leash.
A run down of the major players’ interests highlights just how eagerly they are sifting through their massive client databases, knowing full well that if they don’t get to their clients first, they will lose them to someone else.
In addition to offering elite services to the very rich, the aim is to cap-ture less wealthy customers long before they would even think of going to a planner.
KPI Research’s Tom Collins says the institutions are carefully seg-menting the market and are slotting advisers into each of these seg-ments.
He adds that those dealing with the “rats and mice” typically sell their own products, while those dealing with the top end of the market gen-erally offer independent advice.
“A lot of financial planners target retirement dollars. But we are also interested in helping people get dollars for retirement,” says Steve Helmich managing director of AMP Financial Planning which emerged as the country’s largest planning group in Money Manage-ment’s Top 100 survey.
It has the largest number of financial planners — a whopping 1,472 of them working out of 720 offices — and $50 billion in funds under ad-ministration.
According to Helmich, its planners are divided into three tiers, the first of which – the entry level planners – have completed two DFP subjects and distribute AMP products.
The higher level tier two advisers, who must hold four DFP subjects, sell a wider range of investments while the highest tier, those in the Premier Group, are either certified financial planners (CFPs) or are about to become CFPs. They target the top end of the market and sell the broadest range of products and services.
AMP’s top slot in the market is further entrenched by its stakes in GIO, which has 190 planners and is strong in the retirement planning market, and in Hillross, which has 172 and targets high net worth clients.
AMP also has a salaried channel called AMP Solutions which has about 70 planners and is growing rapidly.
Helmich says AMP received a boost from its demutualisation – “proba-bly the greatest breeder of financial loyalty” – and its brand is in for another lift next year, thanks to its Olympics sponsorship and its lead-ing role in the torch relay.
Major banks are also expanding rapidly into financial planning in a drive to broaden their non-interest income bases.
Heading the pack, according to the Top 100 survey, is the Common-wealth Bank.
Commonwealth Personal Bankers, which tends to look after clients with less than $50,000 to invest, emerged as the third largest player in the survey with 613 financial planners and $15.6 billion in funds under administration.
Its planners who sit in 530 branches, selling Commonwealth products to those who wander in from the street
Ranked in 21st place is Commonwealth Investment Consultants which has 189 planners in 99 offices and deals with clients with more than $50,000 to invest. it offers financial plans and sells non-Commonwealth products.
And then there’s Commonwealth Financial Planning, which, with 13 planners, specialises in servicing clients with over $200,000 to spare.
In addition to the Commonwealth’s 50 per cent share in Ipac (with 32 planners), bank clients with a million or more to invest can talk to its executive banking arm.
Commenting on his group’s growth in financial planning, Common-wealth Investments and Insurance general manager Tony Lally says: “We have a big client base of around 7.5 million customers and we be-lieve that a large part of it is untapped.”
“If we cannot look after our customers’ full needs, we will lose them,” he says, noting that the bank’s aim is to preserve the client’s total busi-ness as other players move onto its turf and offer its clients credit cards and a host of other financial services.
To stake its claim in the market, Commonwealth Bank plans an aggres-sive roll out of financial planners. Numbers could jump from over 800 at present to between 1100 and 1200 over the next two to three years, Lally says.
Snapping at Commonwealth’s heels in fourth place is Westpac, which has almost five million customers in Australia.
It has Westpac Financial Services Advisers – with 441 planners and $6.7 billion under administration – and Westpac Financial Service Planners, which has 129 planners.
While the rules are not hard and fast, Westpac clients with an average of around $25,000 to invest usually get to see a financial adviser who is likely to recommend the bank’s products only.
Those with more than $200,000 will talk to a financial planner who may also place them in other groups’ products. And, those with more than $500,000 will deal with a financial planner attached to Westpac’s private bank.
“We cover the full market providing what we call total financial care,” says Westpac Financial Services joint managing director Michael Mi-gro.
“The aim is to keep clients so that they do not have to go elsewhere.”
In addition to responding to clients who walk into the bank’s branches, Westpac also does extensive modelling of its clients databases and follows this up with direct mail and telemarketing.
“Over the last three years we have increased the number of our li-censed advisers by about 20 per cent a year,” Migro says, noting that his group should show a net increase of 125 planners this year.
He says it has around 550 planners at present, but, by this time next year, it should have about 670.
The two other major Australian banks, however, lag behind somewhat in the Top 100 survey. NAB Financial Planning is ranked 13th with its 249 planners while ANZ strolls home with 160.
Having spent some time digesting acquisitions, St George has also started targeting segments within its base of 2.2 million customers.
Its Investment Advisory channel, which aims to have around 200 ad-visers operating out of its branch network, will service people just starting to create wealth and will begin offering new products to suit their needs.
St George recently bought KPMG, which caters for the top end of the market, and it has left the middle market to the two dealers it owns: Securitor, with its 259 planners, and PACT Accountants Inv Group, with 252 advisers.
The institutions continue to make headlines as they snap up financial planning groups to further entrench their positions in this industry.
While many of the deals – like are MLC’s grab for Godfrey Pembroke — involve gobbling up the entire group, a recent trend emerging is for the institution to take only an equity position.
ANZ, for example, has only taken 30 per cent in AustAccount and 45 per cent in Protax while Commonwealth Bank snared only half of Ipac.
Zurich bought 80 per cent of Lonsdale, 55 per cent of Australian Fi-nancial Services and 30 per cent of Bridgeport.
And, most recently Challenger International paid $37 million in both cash and shares for Hobart-based Garrisons.
