Shaping a new generation

Westpac’s launch last month of a $199 Super Health Check is a significant development in the bank’s traditional approach to financial planning.

Westpac’s general manager of advice, Sally Her­man, says the aim of the service is to attract a customer whose needs are relatively narrow, and who has to date been put off by the perceived complexity, jargon and “secret stuff” surrounding superannuation.

And because the advice is limited to superannu­ation, it’s given the bank scope to offer the same service to customers whether they come into a bank branch, phone in or log on to Westpac’s internet banking site. Herman says the bank is keen to make sure it’s not a “metropolitan-centric offer”.

The advice will be predominantly strategic in nature, covering issues such as maximising contributions – including capitalising on the co-contributions scheme – exploiting legislative changes, and setting retirement savings targets.

Westpac is, in effect, creating a new generation of consumers. Having introduced customers to financial planning through a simple and straight­forward fee-for-service model (where advice is paid for separately from any product consider­ations), Westpac thinks they will continue to expect advice to be delivered that way in subse­quent dealings with financial planners – whether they be Westpac planners or not.

By creating a customer base that will happily pay a fee for the advice it receives, these new custom­ers will have quite a different profile from the clients of some of Westpac’s competitors – and, indeed, from some of its existing customers.

Herman says most people who take up the health check probably will not be dealing with Westpac for the first time, but they are probably dealing with a financial planner for the first time.

And while other financial planners may be happy to leave Westpac to service the “rats and mice” with $5000 to $100,000 in a super fund, Westpac hopes a simple first step may cement a financial planning relationship with the bank for life.

“The thing that has concerned me for the last couple of years is that we have, as an industry, probably frightened some Australians away by, one, a bit of ‘secret’ language – quite a lot of jargon – and second, a lot of [talk] about having to have $250,000 to invest [to get benefit from seeing a planner].

“We would like to think that [customers] enter this not as a transaction, but as the start of a relationship.”

Herman says the Westpac planners who will deal with customers of the health check service are salaried, and do not share in revenue gener­ated from product sales.

“We get tens of thousands of referrals from our bankers every year, and what this is looking to do is make that a more efficient process by being able to identify at the first conversation with a banker what their needs are,” Herman says.

“This is not going to be a huge extra cost for us, and from our perspective we know that the customer expects to pay for something, we know what they are looking for and we hope we can be more efficient in our delivery.”

If a customer requires more complex or sophis­ticated advice, they can be referred up the bank’s financial planning ladder, or opt to seek advice from a non-Westpac planner if they prefer.

Herman says analysis of the referrals to Westpac planners from Westpac bankers in the past year shows that as many as half had superannuation issues to address.

“We get so many referrals from our bank part­ners, and this is about being able to tailor a solu­tion for the customer’s needs, rather than having a broad conversation and taking a long time to hone it into what the customer needs,” she says.

Herman says the same compliance issues arise whether a customer enters a bank branch, uses the phone or goes online. While the health check is focused on super, “in the gathering of informa­tion from customers we would do a full needs analysis”, she says.

“We’d go back to them, if [the advice they need] is more complicated and …say to them, look, this $199 offer is about this piece, we recom­mend that we do a plan that covers these other things,” Herman says.