How would you like to get into the right financial advisory group right from the start? I am about to share with you the research I have done as well as my own personal observations.

A quick refresher from the previous article, the financial advisory pie is divided into three groups: personal or private bankers, tied-agents, multi-tied or IFAs. Due to the breadth of products and services offered, they tend to appeal to differing demographic groups, customer profiles, and also require different skill-set to market services to them. Their business models also have different strengths and weaknesses.

Retail banks have a wide customer base that can best be defined by the neighborhood in which they serve. Retail banks located in the high-end residential areas tend to have more affluent customers and banks located in heartlands tend to have middle-aged or older customers. Due to the transactional nature of bank’s services, customers are more likely to be accessing a service and then redirected to personal bankers to offer financial products. Personal bankers equipped with good presentation, persuasion skills and closing techniques will fare well in this environment.

Private bankers target customers in the HNWI range (individuals with more than S$2m net worth or $300,000 income per year). They are usually highly paid professionals, senior executives or SME business-owners. Private banking clients usually visit the branch or the meeting takes place in another location. In this case, customers are prepared to listen to specific financial solutions. At this level, you’ll need a good network, have active listening and diagnostic skills, as well as knowledge about sophisticated financial products. Usually, private banks will not consider your application unless you have a couple of years experience and have a ready pool of HNWI clients to bring along. <SMU article on private banking career>

The advantage of working in a bank is the security of basic pay, walk-in customers or a captive customer-base. This would also work for those pursuing a corporate route. One of the disadvantages is a stressful quota-driven system that sometimes causes conflicts-of-interest

Tied-agents appeal more to the mass market, who can do with simple packaged products that take care of protection, accumulation and retirement needs. The barrier-of-entry is low for tied-agents, and little differentiation between companies. To create sustainable income, tied-agents have to differentiate in other ways like servicing, advisory competency and working with other professionals like lawyers or accountants. Another strategy that is popular is capturing natural markets through recruiting new agents.

The advantages of a tied-agent are relatively simple to understand products, attractive commissions and due to the long history, insurance companies usually have well-established sales training and support systems. The disadvantages are the lack of differentiating factors and the limited product range which may not suit all customer situations.

Multi-Tied or IFAs can piece together a portfolio of financial products or services (e.g. loans, wills etc) from different companies to meet their customer’s needs. Most IFAs are also trained in a wider base of knowledge like tax/estate planning and investment portfolio planning. Mass affluent clients are therefore drawn to a higher expertise and broader financial services/products IFAs and multi-tied companies can offer. Another growing clientele are the early entry HNWI which do not get very good vibes about banks. <find out more in “Going Independent”, by iFast Financial Pte Ltd, second place winner at Enterprise 50 Awards 2008>

While being able to offer a broader product/service range, thus, more objective advice, it also means that a multi-tied financial planner or IFA needs to have a wider knowledge base about financial planning and products (eventually). You can consider Multi-tied and IFA companies, which are a relatively new trend, to be a sun-rise industry, but it can struggle with branding issues as compared to well-established banks and insurance companies. <a must see “The Rise of IFAs” by iFast Insight Magazine>

Below is a summary table of what’s been revealed so far:

If you are still reading, you’ll be keen to find out more about:

“What are the Career Routes of a Financial Adviser?” or

“Am I suitable as a Financial Adviser?”

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