Independent financial advisors (IFAs) should use the Australian Securities and Investments Commission’s (ASIC’s) verdict that banks are pushing their own products to their advantage, and place greater emphasis on the breadth of their service proposition when reaching out to new customers, according to GlobalData Financial Services
According to our 2017 IFA Survey only a handful of IFAs perceive competition from universal banks as a threat.
This shows a belief among IFAs that they do not stand in direct competition with Australia’s big four incumbents. This is not wrong per se; for example, our data shows that IFAs tend to attract an older and more affluent segment of the market than banks.
However, this does not mean IFAs cannot broaden their target market and reach out to a wider demographic.
Results from our 2017 Global Retail Banking Survey show a significantly larger proportion of the Australian population has used a bank at some stage when arranging investments compared to an IFA.
Interestingly, the main feature Australians are looking for when selecting an adviser is access to a wide range of investment options.
That is in direct contrast to ASIC’s finding that banks continue to breach the “best interest duty” and are more likely to recommend products manufactured by their parent companies, intentionally limiting customers’ options or withholding more suited alternative investment products.
Even demographics that are not typically drawn to IFAs will find themselves more likely to opt for independent advice when they learn their trusted banking partner has been pushing products that are not in their best interests. The 15% of IFAs that are independent of a product manufacturer should start aiming for a bigger slice of the pie by highlighting their two core strengths: unbiased advice and a wide product range.