suntzuaow“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” - Sun Tzu

Make no mistake. The financial services market is a lucrative and therefore a competitive one. But does that mean that as a new entrant, you cannot compete with more entrenched players?

Take for example “QB House” born in 1995, Japan, revolutionized hair-dressing by introducing the “10 minute hair-cut”, in a market where traditional hair saloons dominate. It correctly identified the needs of their potential customers and trends of a new generation of people on-the-move, with no preference for the lengthy “pre-cutting” practices.

What is necessary is adopting a “Blue Ocean Strategy”in the midst of your competitors, fighting the competitors’ weaknesses, avoiding their strengths and creating value your competitor lacks. Firstly, let’s have a look at the participants in the financial advisory pie.

The financial advisory pie can be divided into three main financial advisory groups: (1) personal bankers in the retail or private banking level, (2) Tied-agents financial planners and (3) multi-tied or independent financial advisers (IFAs).

Tied-agents are representatives of one insurance company and their products. Multi-tied financial planners have to place a significant part of their financial products with one company, typically an insurance company. Independent financial advisers typically offer fee-based advice, and have the freedom to recommend products from different financial institutions.

A significant development in financial services is the emergence of banc assurance and IFAs in the last six years.

Although banc assurance is a significant player, accounting for 19% of insurance premiums for 2007and the dominant sales distribution for unit trusts, recent events involving structured products and cases to FiDREC have shaken the confidence of banks to provide good financial advice. For personal and private bankers, this is a crucial time to build on the client relationship by communicating better, and empathizing with client’s losses, resolving them expediently with goodwill. This is a good opportunity for financial advisers to secure displeased customers of banking competitors. <see forum on investing with financial instituitions>

And since the passing of the Financial Advisers Act in 2002, IFAs have grown from just accounting for 1% of insurance premiums in 2003 to 12% of insurance premiums in 2007. In terms of investment dollars, IFAs have doubled their assets under management from $2.45 billion in 2006 to just over $5 billion in 2007. Mass affluent (individuals with more than $80,000 per annum income) and the early high net worth individuals are more attracted to IFAs who can match bank’s product offerings and be more objective in their advice.

While tied-agents have now two new forces to contend with, they must now add value through stronger customer service, competent advice and the insurance companies must continue to innovate and come up with better and more competitive products.

In the next article, you will discover the characteristics of the different customer demographics, strengths and weaknesses of the three financial advisory groups, from which you can better assess the suitability and potential of your financial advisory career. “What’s the Competition Landscape in Financial Services in Singapore? Part II”



[[T_F]]Data Leak Prevention – Data Security Solutions – Information Theft Protection, Detection and Prevention Software Productstracefusion_signature=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[[T_F]]