It is interesting to see how BNZ has re-entered the financial adviser market for the distribution of home loans and how quickly it now accounts for 40% of the home loans they issue. That has reversed the gradual slide in BNZ market share. It is also contributing evidence to conjectures on the strength of the advised channel:
- Advisers are able to handle complexity quite well, which helps consumers worried by increasingly complex rules in the home loan area. Those rules keep changing too, as the Reserve Bank struggles with ways to rein in a hot residential property market while keeping interest rates low.
- Third-party advisers represent a quick way to reach a lot of customers. While they can be expensive in a variable cost basis they are cheap in a capital cost basis. The added distribution must add up to the equivalent of a lot of branches that would have had to be equipped and staffed before a single loan could be sold.
Of course, regular readers will know that we don't see this as advisers versus direct. Increasing complexity and the attractions of variable cost channels are forces unlikely to change, so the adviser channel is likely to remain important. We see this as a necessarily multi-channel world. Keep the branches, keep your online sites, develop more, and keep distributing through advisers too, because quite a lot of consumers like advice.