Commonwealth Bank of Australia’s wealth arm, Colonial First State, has reaffirmed its commitment to financial advisers following the success of its new low-cost direct-to-consumer solution, Essential Super.
Over 55,000 bank customers have opened an Essential Super account since the product was launched on July 1. Around 4000 new accounts are opened each week.
Despite the new product’s success, Colonial First State’s general manager of product and investments, Peter Chun, said Colonial was still fully committed to the independent financial adviser channel.
Colonial First State is also looking at ways to integrate its traditional platform administration business, which includes the $62-billion FirstChoice and $15-billion FirstWrap, with the bank’s new online investment hub, MyWealth.
The bank launched MyWealth in February. The website enables CBA customers and users of its internet broking site, CommSec, to build diversified investment portfolios including cash, property, shares and super.
Chun said many self-directed investors were attracted to MyWealth because it helped them construct portfolios of direct assets and provided useful articles and information on markets and investment strategies.
However, he said, there was also an opportunity to make it easier for investors to access managed funds.
“CommSec customers already have access to MyWealth and we’re investigating ways to integrate components of FirstChoice with MyWealth.
“The self-directed channel has a strong focus on equities, but many also want access to managed funds,” he said, adding that there are 120 managed funds on the FirstChoice platform.
Chun said the bank’s newest initiatives were focused on improving customer engagement and financial literacy, which would ultimately benefit financial planners and their clients.
He said Essential Super targeted bank customers between the ages of 18 and 40, leveraging off its internet banking site NetBank. It was building a membership base of clients who would potentially seek advice in the future.
“Essential Super was designed for people with simple needs and lower account balances, who are apathetic, disengaged and don’t want to pay for financial advice,” Chun said.
“Once these people reach a certain age, they may need a financial planner, while others may not. The good thing is that it is teaching people about saving for retirement and that will make people more prone to seeking financial advice. This will help financial planners because the clients who do approach them will be more literate.”