Banking on growth

It’s an ambitious plan, to say the least. Amid an incredibly tight job market, BankWest is embarking on an aggressive growth strategy which will see more than 100 financial advisers recruited over the next three years.

In a move that mimics the strategy adopted by its British parent, HBOS, the bank will roll out a new financial planning capability aimed at retail customers.

However, in doing so it must overcome a major challenge. The financial services industry, like the resources sector, is facing a skills shortage with large institutions struggling to recruit talent.

Some firms have had to pay through the nose to acquire rival dealer groups in their bid to bring on board good quality advisers.

In early December, ING Australia announced it would pay more than $50 million to acquire FSP Group, which includes independent dealer group Financial Services Partners.

As part of the acquisition, Tandem Financial Advice, which is already 100 per cent owned by ING, will be integrated into the FSP Group.

That same month, Aviva Australia acquired a stake in Melbourne-based boutique dealer group Meritum Financial Group, which has about $2.6 billion in funds under advice and more than 80 advisers.

Ian Corfield, BankWest’s retail chief executive, admits the recruitment goal is a tall order, given market conditions, but is steadfast in his conviction.

“We recognise that it’s a very tight market,” he says.

“There are lots of people trying to grow their financial planning businesses and we know it’s not going to be a walk in the park for us but equally BankWest has something unique to offer. The look and feel of the stores is very different so we think that will be attractive to customers.”

A similar strategy certainly appealed to custom­ers in Britain, where HBOS grew in just four years to become the biggest bancassurer in the UK.

Corfield is well placed to manage the project, having led a recent branch expansion for HBOS in Ireland. He credits the UK success story to a customer-focused product offering and a retailing approach to banking.

However, he recognises that the Australian market is an entirely different animal.

“In the UK we managed the financial adviser sales force as part of what we were trying to achieve in retail,” he explains.

“The reason a lot of banks struggle is they might be under the same roof but they are two totally separate entities with separate propositions for the customer. [But] the investments and a lot of the insurance products here are more sophisticated than they are in the UK and we want to make sure we have a very strong offering.”

Through its new advisory capability, BankWest is hoping to tap into what it perceives to be a gap in the market.

A survey commissioned by the bank in Sep­tember last year revealed 72 per cent of Australians have no access to a financial adviser.

In light of this, BankWest will offer a suite of investment and insurance products suited to those with “simple advice requirements” via its branches.

The new financial planning platform will open for business on March 1.

“Higher income earners are more likely to have an adviser, suggesting that many Australians on lower or middle incomes are missing out on oppor­tunities to build their wealth; arguably those who need to stretch their dollars furthest,” says Corfield.

“Our goal is to make financial products and advice more accessible and cost-effective.”

How will the bank do this? Corfield is keeping his cards close to his chest.

“You’ll have to wait and see,” he says.

But he says there are ways to make financial planning more accessible while still profiting from being in the market.

“We think there are ways we can grow the mar­ket by bringing more customers in who otherwise would have been put off by the cost, but also to take business from other banks,” he says.

“We will be recruiting very aggressively, starting immediately, and will be looking for sales-focused individuals who like and understand people and will not make customers who have never seen an adviser before feel intimidated.”

The premise on which this attitude centres is perfectly valid: to capture a market that has tradi­tionally not sought out financial advice, friendly and approachable advisers are essential.

But BankWest’s competitors question whether a sales focus really is the best way to go in an environment where the higher quality players are largely moving towards models that don’t rely on a sale to generate revenue for the planner.

“We’re using that term because we want to focus on advisers who are keen to talk to customers every day,” Corfield says.

“At the end of the day this is a retail proposi­tion, and we’re looking to recruit people who want to be part of that team. That means they want to be out and about meeting customers on a regular basis and I think they should be rewarded for that, but we also want to make sure that they’re making quality sales. I don’t want sales for the sake of sales, I want to make sure we’re meeting customer need.”

BankWest will draw on three sources to recruit advisers, and is even flying in personnel from the UK to help track down talent.

In addition to headhunting advisers from rivals, Corfield says the bank will attempt to “grow them locally” by training existing branch staff such as mortgage advisers through an internal academy.

Furthermore, Corfield says there are numerous UK-based financial advisers working for HBOS who are interested in coming out to Australia, with discussions currently underway.

Growing the bancassurance offering forms part of a broader HBOS Australia strategy.

HBOS Australia’s wealth management divi­sion, St Andrew’s, is also recruiting aggressively in 2008 and will remain the product engine for the new bank-based planning business.

Paul Northey, acting managing director at St Andrew’s, says the bank’s existing planning network Whittaker McNaught, which it acquired in Febru­ary, 2007, will continue to provide financial advice solutions to higher net-worth business and private banking customers.

It is not yet clear how the new planning network will dovetail with Whittaker McNaught. However, Corfield says the distribution channels differentiate the two.

The branch network will focus on those customers coming through the doors of the stores, while Whittaker McNaught will continue to expand via seminars, advertising and the contacts of its advisers.

“They’re operating in different distribution spaces,” Corfield says.

“Whittaker McNaught is probably targeting a slightly higher segment of the market, but we don’t envisage any conflict between the two channels, because they’re talking to such different audiences.”

Initially, the range of products and services available through each channel will not differ, but Corfield says this may change in future.

“I’m sure that over time as we roll out more branches we’ll find that we have a slightly differ­ent product set for customers coming through the branches, but at the moment we are still operating off one core product set and matching that to cus­tomer need, and I think that’s the right way to go.”

Northey says the roll out of the new low-cost financial planning business expands HBOS Aus­tralia’s offering across all customer segments.

“The launch of a retail-focused financial planning capability through BankWest running alongside our existing financial planning businesses delivers a proposition which provides advice and funds management solutions to all customer seg­ments,” he says.

The latest initiative comes on the back of Bank­West’s ambitious branch expansion on the east coast, announced in July last year.

Stepping up its assault on the Australian bank­ing industry and challenging the dominance of the Big Four banks, BankWest will build 160 new retail and business bank branches within the next three or four years.

The bank intends to have a financial adviser in every branch, reflecting a market that is growing in both wealth and its desire to manage that wealth more effectively.

If successful, BankWest could be well placed to capitalise on the growing demand.