Speaking to ifa, Connect Financial Services Brokers CEO, Paul Tynan, said scandals exposed within some of the biggest financial institutions are the result of a “clash of cultures” between business managers and the client-facing and investment professionals under their control.
“Why do you think the banks’ wealth management arms are blowing up? There’s one fundamental reason: you are putting bankers with short-term time horizons in charge of wealth managers with long-term time horizons,” Mr Tynan said.
“That clash of cultures does not work within an organisation – it never has. Those in charge are interested in careers inside the bank and the organisation’s short-term KPIs.”
Mr Tynan – a former AMP financial planning and platforms executive – said many with institutional experience have long been aware that this “clash” would lead to problems down the track, as evidenced by the CBA advice scandal and closure of Genesys.
Having recently launched a business which connects Australian SMEs with south east Asian counterparts, the business broker said the short-termism within Australian management culture was holding back opportunities in Asia.
“[Asian investors and businesses] like formal introductions and the relationships take time,” he said.
“They see us as having a business culture too similar to the Yanks – that everything is short-term. It’s back to the ’80s.”
The comments come as ASIC has revealed an additional four current CBA-aligned advisers are under investigation for misconduct.
Referring to Americans as Yanks?? Think you are also back in the 80’s!
So let me think this through – are you all saying that you don’t need KPI’s? I don’t know any business that does not have KPIs – something that is now also being used in sport. If you think you can have a successful business without KPi’s – good luck. As an example, I may have set myself a target of seeing 5 people per week, then a conversion of x%. If I am not getting this, maybe I am seeing the wrong type of person, not seeing enough clients or am not getting through to my clients etc etc. Don’t mistake KPI’s with product floggers! I also do not agree with sales being a dirty word which is being insinuated with a number of comments. Professional sales is what we are missing. Having a meaningful conversation with a client and being able to keep asking questions to get a clear understanding of a clients needs then proving the most suitable solution is sales – We need to start focussing on what we can control and how we assist our clients with our value add not rubbishing each other
Bloody hell. I have been saying exactly this for years – bankers should not run insurers. Costello & co did not agree!
Insurers take people on board as clients for long periods-40, 50 or 60 years. Business decisions are taken on that basis
Bankers are only interested in TODAYS deal. They do not value client retention
Its all about immediate increase to shareholder value
And, of course, management bonuses
fighting words Margaret and hard not to argue with them
Fully agree Paul. I think the bank vertically integrated models are marginally worse that the non-bank models but the culture is pretty much the same. They could all do themselves a favour and be honest with the advisers and ASIC and just admit that their models are about driving money into their platforms and underlying funds. To be clear there is nothing really wrong with that if it suits the adviser and the client but the instos just need to be honest about it. Anyone contemplating joining an insto owned licensee could do worse that ask to see the STIs and Performance Contracts of each person in the support, BDM etc chain before joining. It may help provide some comfort to how much of the offer is really suited to them and how much is smoke and mirrors.
What a refreshingly honest article. When are the instos going to learn that it is all about the human relationship with the client. You cannot KPI relationships. The art of management has been lost in this country as ‘inspirational’ has been replaced with chasing numbers to meet ever increasing KPIs no matter how much this burns the client. Most people deep in the multilayered bureaucracy of an insto have never met/sold anything to a client face to face and have never run their own business. They have spent most of their time competing and stabbing each other to climb that KPI leaderboard to keep employed, augment their salary and suck up the most to get promoted. How about they try and make more money by looking after the clients, rather than constantly hitting the headlines from ripping them off? It might also pay to manage their staff a little better rather than treating them like battery hens where the only management technique is dangling KPIs in front of them – round we go again!
Spot on Paul. The first step is to remove the sales culture that feeds management via commission up the chain. This culture and people are still alive and well within the system and until they disappear, nothing will change. They are still there. Interesting to see if ASIC can handle the issue – time will tell or maybe a good old fashioned royal commission is needed- a lot of pain but at least it may solve the band aid syndrome we live with at present
Spot on Paul,
couldn’t have said it better myself. This is the root of the cause of misconduct and until vertical integration blows itself up, this ‘clash of cultures’ won’t change 1iota.