View more on these topics

Tim Sargisson: Why banks will always play second fiddle to advisers


It is of little surprise that banks are looking to get back into the advice game. Banks will always believe they have a right to a place on the grid in the race for consumers looking for someone to manage their assets.

However, despite their size, high street presence and deep pockets to provide for the investment in IT and marketing, banks have always been the Manor Marussia on the grid, not the Mercedes, and it is worth an examination of the reasons why.

The numbers game

There has always been a clear conflict between the short-term demands of the bank and the long-term investment aspirations of the customer.

“This month we will be mostly selling XYZ product,” is the diktat received by the branches from head office as to what financial instrument the bank wants sold that particular month. Far too often, banks have seen financial services as a numbers game akin to supermarkets flogging boxes of washing powder.

Contrasting priorities

In many cases, there is a lack of alignment between the interests of the bank, the bank adviser and the customer. Good advisers understand that the key to success for them, their firm and their customer is developing a real understanding of a client’s financial needs and ensuring an investment strategy is designed to achieve their goals in the short, medium and long term. If the bank is only interested in flogging a particular product, and hitting targets, the interests of the customer may not always be the priority.

For too long bank advisers focused on targets, transactional business and potential bonuses, and were perhaps less concerned with the consequences for the bank if things went wrong for the consumer. With this in mind, it came as no surprise when Santander withdrew from investment advice in March 2013, after pulling its 800 advisers off the road for not meeting RDR standards, and that a year later it was fined £12.4m for unsuitable investment advice.

Unsuitable advice

If the only tool you have is a hammer, the solution is to treat everything as if it were a nail. Historically, banks provided a narrow range of expensive products and the scent of commission overcame the odour of deceit when persuading a customer a particular investment was in their best interests.

How else can you explain the reason behind 3,200 Norwich & Peterborough clients investing in Keydata, which cost the small provincial building society £60m in redress costs, forcing it to agree a merger with Yorkshire Building Society five years ago?


We have seen the impact of banks’ historically poor standards of risk management and the real lack of understanding of the regulator’s relentless focus on customer outcomes. Bank advisers had it made thanks to PPI sales and it was bonuses all round when the branch smashed sales targets month-on-month. But where are the culprits now the compensation bill stands at £27bn and continues its upward trajectory?

The post-RDR world

RDR transparency really does not sit well with the costs of bancassurance products when those sourced by advisers provide considerably better value.

Everything boils down to the continued lack of trust shown by consumers towards the banking sector. Last month, the Nottingham University Business School Centre for Risk, Banking and Financial Services, which produces the Trust and Fairness Index, once again had banks propping up the list.

In addition, we have read two former Co-op bosses are banned for life from top City jobs for prioritising the bank’s short-term financial position at the cost of its long-term capital position.

The banks would be better off using their considerable resources to develop a unique, scalable robo-advice solution. However, Santander believes the answer is 225 shiny-suited investment advisers. It will be interesting to see how it pitches this as its way back into the customer advice space, bearing in mind the considerable challenge it faces in bridging what is not so much a credibility gap as a chasm.

Tim Sargisson is chief executive at Sandringham Financial Partners



Goldman Sachs insurer eyes Aegon annuity book

Pension insurer Rothesay Life is in advanced talks to buy an £8bn annuity book from Aegon. Sky News reports the insurer – owned by Goldman Sachs – has entered exclusive talks to purchase the annuity assets from Dutch-owned Aegon. In September 2015 an internal memo responding to speculation the whole firm was for sale reaffirmed […]

FCA interior logo 620x430

FCA: EU disclosure rules confuse consumers

The FCA is warning onerous European disclosure requirements risk disengaging consumers and damaging their ability to make decisions. In the regulator’s response to the European Commission’s call for evidence on Europe-wide regulation, it says firms are forced to disclose an ever-increasing amount of information. Regulations such as Mifid II and Priips risk “confusing and discouraging […]


Apfa: Regulation is not the only barrier to social investment

  Social investment has become increasingly fashionable in recent years, from the launch of specialist bank Big Society Capital in 2012 to the Social Investment Taskforce established by the UK G8 Presidency in 2013 and HM Treasury’s social investment tax relief introduced in 2014. The latest initiative in this field comes in the form of […]


Think-tank: Govt should ignore flat rate and abolish tax-free cash

George Osborne should resist moving to a “misguided” flat rate of pension tax relief and instead cut or abolish tax-free cash, an influential think-tank says. In recent weeks it has emerged the Treasury’s preferred option for a new system is the flat rate of relief championed by much of the industry. But the Institute of […]


News and expert analysis straight to your inbox

Sign up


There are 4 comments at the moment, we would love to hear your opinion too.

  1. Not really second fiddle, more like bubblegum boy band music. The quality may be terrible but they still sell a heck of a lot of it.

  2. The point you make on commission has also been a big issue pre RDR in the adviser market. And when it came to selling toxic products such as the N&P point you make – the banks at least can afford to pay thier own compensation!

  3. Open declaration, I worked for a major bank and trained their advisers/salesforce. I fully confirm Tim’s comments on the way banks worked and there is no way they could return to those days.

    Yet I believe there is a role for them. Let’s say you wanted one of your children to learn the piano. You wouldn’t go to the Royal College and ask for lessons, you would go to your local teacher so they could master the basics. As they got more proficient you would look for a more experienced teacher who could take them on further.

    I see the banks’ role as being the local teacher. Get people into the savings habit, building up an emergency fund then starting regular savings into equity ISAs. Products should of course be low cost and flexible. Once they have built up some capital they can move on to an IFA for more advanced advice.

    To be honest I’ve no idea how or if the banks could make this pay. And before I’m accused of advocating inferior advice I would argue that building up savings or capital is always worthwhile. Of course regulation makes it harder to save than taking on debt but that is another story.

  4. A good article. Trayner, I am x bank, my training up to the 1990’s was superb, when banks where about banking and not selling, so called Captain Mannering bankers . There was an advantage back then, you paid for banking services, which to my mind is what we should return to. The bank offers a service and just like advice, this should not be seen as free, there is a cost to running a current account and the consumer does not understand this, they think its free.

    Then in the early 1990’s came the American style sell at all cost to make as much profit as possible ethos. Bank advisers went from not being allowed in the branches, paid by commission only, to being salaried (normally three time the target for a third of the pay) target driven and managed by branch managers desperate to hit their targets. Clearly we cannot return to those dark days.

    So, how could the banks return? Firstly it should be via a completely separate legal body, not form part of the banking system. They should have to comply the same as every other financial services company offering advice. My fear is the current review is looking to reverse parts of the RDR to accommodate the banks, this cannot and should not be allowed.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm