However one important point to note was that 650 (30% of their total UK cuts) of their 'tied' financial advisers (their branch based individuals who can only offer a limited range of products provided by the bank and it's commercial partners) are being cut. The bank confirmed that this was so that the bank can have 'continued profitability in the face of a changing regulatory landscape'......confused? Let me help you by translating...the HSBC management doesn't believe that their tied financial advisers can survive after the end of the next year (due to the upcoming changes in the financial services environment which you can read more about here and here). Interestingly HSBC have decided to keep their independent financial advice arm throughout this process.
I started my career within a bank based environment, and also spent a few years as part of a 'tied' sales force within one of these banks and I've written before about how many of both my interpersonal and technical skills were developed whilst working within this environment. This was due to the fact that the quality and standard of the training provided were of an incredibly high standard and I'll forever be grateful for this.
However since becoming an independent financial planner around 7 years ago, I look back and wished I'd been in an independent environment from day one and there are a number of reasons why. In our business, individuals are treated like clients. In the tied bank environment, individuals are treated like customers. So, what's the difference? We work with our clients over the long term to try to improve their long term financial situation...there's no 'quick fix' and we are there to guide our clients along their financial journey on a regular basis. We work in partnership with out clients to help them.
In the Bank environment it's all about the 'product'....individuals are customers where the tied financial advisers are targeted primarily to sell a pension, life assurance policy or investment. I'm ashamed to say that when I worked in this environment my focus wasn't on the client.....it was on the target I needed to achieve! I'm not making excuses, but I didn't know enough about the independent sector back then to understand there was a better way.
Also the 'sausage factory' (one client out and the next client in) culture the bank environments reinforce mean that you cannot treat individuals like clients as you just don't have the time. So, individuals seeking advice from 'the Bank' are customers (who come into a 'shop' and buy a product) and not clients (who works with a professional adviser over the long term).
In addition to this being independent provides me with an opportunity to review the whole of the market to find the most appropriate arrangement. Whilst the Banks have had a rough time in the press of late, they still have a big brand and a captive market (their 'customers' who visit the branch) and therefore the limited range of products they provide don't need to be particularly competitive and due to this the products they distribute don't tend to be that attractive (from either a cost or fund performance perspective) when compared to the rest of the market. This is another reason I believe that independent advice is best.
Last but by no means least, our clients do purchase a 'product' however this product isn't a pension, life assurance or investments. The 'product' we sell is professional independent financial advice. This may mean that the client pays us a fee (as they would for another professional service like legal or accountancy advice) and I believe it's something many of the banks have never provided through their restricted advisers and cannot provide effectively especially in the 'new' environment post RDR.
Due to the reasons above, I believe that the banks pulling out of the tied advice environment is a move in the right direction for our profession as clients are now more likely to approach an independent financial adviser and receive more professional advice as a result. One important point to remember is that with any decision like this there are victims. On this occasion it's the advisers who will lose their jobs as part of the changes, many I know personally as good people who do try to help their clients as much as the banking culture lets them. However it will now provide these individuals with the opportunity to change the way they work, develop as professionals and move to an opportunity which will allow them to work the way they want to, ethically and in the interests of their clients long term financial health.
As ever, these are just my opinions and I'm interested to know what you think. So, what do you think about HSBC removing their restricted sales force? Do you believe independence is the only route forward, or do you see a place for 'tied' advice? Do you think there is a clear cultural difference between independent financial advisory practices and the 'tied' environment?
Also the 'sausage factory' (one client out and the next client in) culture the bank environments reinforce mean that you cannot treat individuals like clients as you just don't have the time. So, individuals seeking advice from 'the Bank' are customers (who come into a 'shop' and buy a product) and not clients (who works with a professional adviser over the long term).
In addition to this being independent provides me with an opportunity to review the whole of the market to find the most appropriate arrangement. Whilst the Banks have had a rough time in the press of late, they still have a big brand and a captive market (their 'customers' who visit the branch) and therefore the limited range of products they provide don't need to be particularly competitive and due to this the products they distribute don't tend to be that attractive (from either a cost or fund performance perspective) when compared to the rest of the market. This is another reason I believe that independent advice is best.Last but by no means least, our clients do purchase a 'product' however this product isn't a pension, life assurance or investments. The 'product' we sell is professional independent financial advice. This may mean that the client pays us a fee (as they would for another professional service like legal or accountancy advice) and I believe it's something many of the banks have never provided through their restricted advisers and cannot provide effectively especially in the 'new' environment post RDR.
Due to the reasons above, I believe that the banks pulling out of the tied advice environment is a move in the right direction for our profession as clients are now more likely to approach an independent financial adviser and receive more professional advice as a result. One important point to remember is that with any decision like this there are victims. On this occasion it's the advisers who will lose their jobs as part of the changes, many I know personally as good people who do try to help their clients as much as the banking culture lets them. However it will now provide these individuals with the opportunity to change the way they work, develop as professionals and move to an opportunity which will allow them to work the way they want to, ethically and in the interests of their clients long term financial health.As ever, these are just my opinions and I'm interested to know what you think. So, what do you think about HSBC removing their restricted sales force? Do you believe independence is the only route forward, or do you see a place for 'tied' advice? Do you think there is a clear cultural difference between independent financial advisory practices and the 'tied' environment?
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