Commonwealth Investment Management (CIM) has indicated it will continue to create investment products and develop distribution despite a trend by a number of its competitors to move away from product.
The head of CIM, the funds management arm of the Commonwealth Bank, Nick Basile says this means the group would still concentrate on the production of investment products for both the wholesale and retail markets.
According to Basile CIM has mainly had an internal focus, working with the bank’s own funds which, under CIM, total $33 billion in funds under management. Of this only 40 per cent comes from wholesale clients and 60 per cent from the retail side of the operation.
He says this focus has shifted due to the merger with Colonial which has caused some channel and product conflicts, but the integration of the two groups has enhanced distribution and product manufacture.
Basile says the reason for the push to distribution by banks is due to greater margins being available on that side of the business. However he says while the CBA is interested in that side of the business it would not move away from product either.
“The main reason we are staying with product is that wholesale is profitable. If we do a good job on that side of the business it is good for the retail business as well,” Basile says.
CIM chief investment officer Martin Littler says the group is aware that while margins are on the client side, any moves for clients to deal direct will have an affect and return the focus to creating better products.
The CBA group still also has a strong presence in distribution with 1100 branches and more than 1600 financial planners on its books.
Of this latter number nearly 500 came across after the merger with Colonial and a large majority work through the branch network. The noticeable exception is Financial Wisdom, which operates autonomously within the group outside the branches and has nearly 300 planners.
