I know a couple of parents who live in suburbia. For many years they were regarded by their family and friends as the perfect parents. Especially the mother.
Her first two children (now adults) were perfect with no hint of mental illness or drug addiction or any other serious behavioural or health issues. They were (and still are) very bright and successful people. She, the mother, was deemed to have done all the right things with regards upbringing, health, education, social etiquette etc. Then along comes a third child. Equally talented but in ways that are different to the first two kids. Child number three and the mother do not see eye to eye (always arguing, fighting etc) and the opinions of those that thought she was the perfect mum begins to wane as the arguments and sniping are conducted in public.
What changed? The mother is still the same person utilising the same skills that worked with her close to perfect first two offspring. What changed was that nature threw her a curve ball and she didn’t adapt. The techniques that had worked so well with her first two just weren’t working with the third. Rather than adapt, the rigid mother simply refused to engage with the third. So the third engages with the father which goes to further infuriate the mother (who is now being unfairly labelled a control freak by those that know her – all ideas of the perfect mother now abandoned).
Don’t worry, this is not an article about good parenting (not a topic I’m especially qualified to write about nor do I consider myself a “good parent“ whatever that is). It’s merely a way of highlighting how we view most things in life.
When things are going well it’s easy to be good at whatever it is you’re doing. Where I tend to focus is what happens when things go wrong. How do we adapt or respond when something that is out of the ordinary occurs?
And so, we come to your lenders. You remember when you were like their perfect children? They treated you well. Now they’re probably treating you like the third child in the example above.
How’s that going for you now that policies have tightened and the bank that you borrowed from a few short years ago is not only refusing to lend you any more money to fund your growth but insisting that you reduce your borrowings and raising rates to force you to do so? Worse, they’re waving the loan agreement in your face saying they have every right to do what they’re doing.
Last week we were approached by five commercial borrowers with long term relationships with their banks. All had good, solid, long established businesses. All were doing well financially. The perfect clients – for a while. Now, most have noticed that their relationships with their lenders have taken a sour turn. The biggest complaints: “my bank no longer understands my business.” and “they have promoted a young person into the relationship role and expect me to train them.”
In all cases, the banks were waving a loan contract at the client and quoting from it. This is not a good basis for a relationship.
What can we do? We can place two of the clients (the other three are not yet willing/ready to move – they’re still at the denial stage) at a lender with a relationship manager that we vet. That will solve the problem temporarily. What clients have now realised is that when we undertake to perform this transfer banks are no longer custodians of that relationship. We are. Clients are ok with that because they get the service that they require.
Where once, bankers were the trusted adviser brokers – unburdened by kpi’s, annual appraisals, managing up or down and other distractions – are stepping in and taking over that role. Regardless of whether it be in a commercial role or a home loan.
The cynical amongst you will say that the banks can take back the relationship at any time. My view is that banks (in Australia at least) are happy to do away with the role of relationship caretaker. They have realised their strength is in processes and processing not holding a client’s hand.
It’s cheaper for a bank to pay a broker 0.50% to originate a loan rather than pay an RM hundreds of thousands plus bonuses, superannuation, office space, IT etc. They also don’t pay when there’s no origination.
Sure, there are people that will always walk into a bank branch to do their banking. They are diminishing in number.
They are the perfect clients. At least for now.