The upper hand for independent advisors looking to take business from the big banks is almost twice as big as that for other independent players competing with those institutions, according to a new study.
Accenture released its annual look at the North American online banking industry,
Banking Shaped by the Customer, Tuesday, along with very telling results from surveying 4,000 bank customers in both Canada and the US in January.
“Two-thirds (67 percent) of Canadian consumers went to a competitor for financial advice,” finds Accenture. “Most consumers (79 percent) define their banking relationship as transactional—a perception that has grown by 8 per cent in just one year. This trend is bad news for banks, and worse news if it continues unchecked.”
Fewer clients of the banks appear to be having any kind of meaningful relationship that improves their financial well-being.
“The survey results confirm that consumers are buying low-margin products from their primary bank and shopping around for higher margin products,” says Accenture. “The majority (61 per cent) of consumers choose other sources for brokerage accounts. When consumers are asked why they stay with their bank, only 5 percent say because the bank ‘provides me the correct level of proactive financial advice.’”
While there’s plenty of positive in Accenture’s report towards the banks there is no doubt that consumers in both countries are willing to veer off the beaten path when it comes to obtaining financial advice.
Full-service financial advisors needn’t fear the banks nor the robo-advisor movement as long you continue to provide clients with tangible value-added advice and service. Most Canadians still welcome the advisor/client one-on-one relationship.
However, when it comes to millennials, a significant and growing demographic who’ve taken to both robo-advisors
and target-date funds
, it’s vital for financial advisors to keep up with changes in technology and the way in which millennials like to be serviced.
“Banks that try to retain millennial customers by serving them like they have served their parents and grandparents do so at their own peril,” says Accenture. “Millennials are a wholly new kind of banking customer.”
Ditto for financial advisors.