Advisors are experiencing increased competition
Finansforbundet’s survey to more than 1,100 private customer advisors shows that 71 per cent believe that the competition with other financial institutions has become tougher or much tougher in the past three years. “The answers don’t surprise me, because customers are extremely aware of negotiating price and either threaten to switch banks or actually do it”, says Vice-President of Finansforbundet, Michael Budolfsen.
57 per cent of private customer advisors in financial institutions find that there is tough or very tough competition for customers. Compared to three years ago, 71 per cent find that the competition has either become tougher or much tougher. That is what a survey of more 1,110 private customer advisors that Finansforbundet conducted shows.
“The answers don’t surprise me. I hear from many private customer advisors at both member events and in my social circle that there is tough competition for customers amongst financial institutions. The customers are extremely aware of negotiating prices and terms and either threaten to change banks or actually do it”, says Michael Budolfsen, Vice-President of Finansforbundet.
Opportunity for action
In the survey, private customer advisors were asked whether they have had the opportunity to offer customers better terms.
“Many advisors have a mandate from their management to negotiate prices and terms with the customer, and that is a positive”, says Michael Budolfsen.
84 per cent of private customer advisors say in the survey that they can either exempt the customer from fees or reduce them in connection with taking out a loan and 78 per cent have the opportunity to offer lower interest rates on loans.
High professional pride
Within the last 12 months, only 12 per cent have experienced that there is pressure from their company’s side for the advice to be more to the company’s advantage than the customer’s. Out of those who experience a conflict of interest between their company and the customer, 4 out of 5 respond that they give advice based on the customer’s interests, even if the company might be slightly worse off.
“Private customer advisors have an extremely high professional pride and the financial institutions should use this to create even more room for advice. Fortunately, in many places there is a movement towards assessing the advisor on his or her entire portfolio and not on engagement with the individual customer. It should be remembered that better advice also yields better earnings, because customer loyalty is paramount”, says Michael Budolfsen.
How private customer advisors respond
How do you experience the competition with other financial institutions in your work?
Very tough competition 11%
Tough competition 46%
Some competition 37%
Less competition 5%
No or almost no competition 1%
Don’t know 0%
How do you find that the competition with other financial institutions has developed over the past three years?
Much tougher 10%
Much less 0%
Don’t know 2%
How often do you find that your existing customers negotiate on terms, prices etc.?
Very often 10%
Very seldom 3%
Don’t know 0%
How often in the past 12 months have you experienced that customers have threatened to switch to the competition?
Very often 7%
Very seldom 9%
Don’t know 1%
(Source: Finansforbundet’s survey to over 1,100 private customer advisors in August and September 2021)