I USED to run a mortgage company and, along with other non-bank lenders, we made inroads into the banks' mortgage oligopoly.
The success of that company was attributed to lower interest rates - however, we weren't always the lowest rate in the mortgage market.
What our customers tuned into was the fact we were building branches. While the banks were shutting thousands of them in the 1990s, we opened them and people liked that. When it comes to money, not everyone wants to use a call centre. The same thing is happening again. There's a new wave of financial services migrating beyond the computer and to phones and tablets and banking is no longer just on websites - it's moving into social media such as Facebook. But as these services migrate to devices that fit in the pocket, people still need something more.
The key, in my opinion, lies in the difference between the financial services you can turn into a "product" and those you cannot. And it's becoming obvious to me that while most Australians are happy to get a CTP green slip or a credit card or a car loan over the phone or internet, most are looking for more when they get a mortgage, arrange life insurance or allocate their retirement investments.
People are happy to use financial products but they really want advice to cap it off.
The Nielsen Pacific organisation released the results of its global survey of investment attitudes a few weeks ago and it made for interesting reading. For instance, 70 per cent of Australians used the internet for banking and investment transactions in the previous three months, suggesting we're all shifting onto the internet. But the survey also found 54 per cent of Australians had visited a bank branch in the previous three months.
In my opinion, this shows a nation that is using the products presented to them for convenience. But they still need to talk about these things and especially the larger, more complex matters such as mortgages, life insurance and super.
It's a quaint picture of a technology-driven country with a traditional heart. But the problems this might create for us in the near future are far from quaint.
An example of this could include our superannuation system, which is compulsory but which puts the onus for retirement investment on the individual.
The first port of call for most people with super is not an adviser but a product. The super-fund member is mailed a brochure that describes the various products and the member ticks the boxes and sends it back.
The Nielsen survey shows just 16 per cent of Australians rely on a financial planner or adviser, while 57 per cent prefer to be in charge of their investment decisions. Now have a look at the fact that 70 per cent of investment-focused Australians currently maintain a shareholding of stocks. This is slightly higher than the global average of 67 per cent.
Look at the correlation: 57 per cent of Australians are in charge of their own investments, which leads to 70 per cent of investment-focused Aussies investing in the worst-performing assets.
I don't blame Australians for their scepticism about advice and therefore muddling by with their own strategies. I believe there have been many forces that have pushed Australians away from being advised on their investments and their retirements. Most banks don't offer advice unless the customer is a "high net worth" client stockbrokers don't give you the full service unless you have a certain amount to invest and the superannuation funds find it difficult to give advice because they have, in effect, become the product.
That leaves the independent advisers and planners, who many Australians avoid because there is either a trust problem or the costs are perceived to be too great.
It is my belief that financial security and retirement planning are crucial things about which Australians with no financial acumen should be seeking expert advice.
More should be done by the super industry, the Australian Stock Exchange, the government and regulators to encourage people to seek advice and have a tailored plan around the complex financial arrangements that make up their lives.
However, people have to show initiative in these matters and decide what's really important. Besides, most people who seek expert advice get something out of it: an insurance broker increasing your cover and reducing your premiums an adviser finding a lower-fee/higher-yield super fund a mortgage broker finding you a better loan or an accountant getting you a better tax result by changing your structure.
Mostly, I believe that when Australians know they can do complex bank transactions on an iPhone, it's probably time for the convenience argument to be balanced by old-fashioned expert advice.