ADVISOR | December 2022

Extending credit to a natural person or to a business is different from offering financial consultancy. In fact, extending credit occurs when an individual/business obtains money from a bank, whereas financial consultancy requires an individual/business to entrust their money to a bank.

Therefore, the ideal bank advisor dedicated to businesses (especially small and medium-sized enterprises) is anthropologically different from the financial advisor.

Bank advisors are, at first glance, in a position of strength: clients turn to them and the bank they represent to obtain money; moreover, they conduct assessments of their clients’ solvency, incomes, and financial statements.

On the other hand, financial advisors are called to earn the trust as well as the money of their clients. In addition, they have to manage their clients’ money successfully, a challenging task which can also lead to long-term loyalty.

The ideal client (in particular, the ideal private client) has two characteristics: on the one hand, they should have a family to support; on the other hand, they should be a professional or an entrepreneur leading employees and collaborators.

Thus, the true challenge for financial networks and banks is assisting and supporting private clients by both extending credit for their business and managing their personal wealth.

Banks have been trying to bring together private managers and business managers. On paper, their synergy is quite patent.

Even more so when protection joins credit and asset management.

In theory, the bank would insure the individual and their business against accidents of any kind. Thereby, liquid assets (often set aside to provide against accident) would become superfluous and clients would thus opt for entrusting them to the bank.

Clearly, should then said client or business need credit, the bank would not deny the loan, which would be guaranteed through the investments subscribed with the same bank.

This system should work perfectly. Except, in most cases, there are three main actors: the financial advisor, the business manager, and the insurer.

Each of them has their own reporting lines, goals, budgets and different, if not opposing, attitudes.

Networks of financial advisors themselves may have different goals and strategies. For instance, when financial networks are independent from banking or insurance groups, it is only reasonable to expect, with due exceptions, a strategy directed towards asset management.

Instead, when financial networks are part of a banking group and share their strategies and goals, they will probably be oriented towards strengthening the synergies between credit and asset management.

When, on the other hand, financial networks are part of an insurance group it is only fair to expect synergies in the realm of protection – life and unit-linked policies – and asset management.

Thus, the point is, how can one bring together all three elements – protection, credit and asset management – with only one mediator for the client?

Some financial networks have found a simple, yet efficient solution: financial advisors assisted by specialists of credit and protection.

In order for this strategy to work, specialists (either insurance agents or experts in the fields of protection and credit) should share the same motivations and goals with financial advisors.

Creating such convergence of intentions in the context of a beneficial logic for everyone – bank, professionals, and clients – is a challenge that will affect the future of many financial networks currently operating in Italy.

Nicola Ronchetti