We are reaching the end of our series about fiscal management for the 7 major business sectors, with the banking and financial service sector being our last public sector. In this episode of "Building Your Multi Million Dollar Practice," Peter M. Vessenes will discuss how banking and financial services get their own division and why the financial services sector represents safety for consumers.
Banking and financial services are a different institution than the rest of the sectors we have covered because they deal primarily with money, not goods and services. These businesses can include everything from investment banking, to portfolio management, to accounting, and much more.
Now, money intrinsically has no value, but to consumers it represents their security in the future. And when looking at this value, consumers either save it or spend it. To best understand the needs of consumers by their banks and financial institutions, let's look at the three main ways they can spend money:
1. Consumables - goods that are meant to be consumed, and only last for a short time (think cell phones, insurance, and subscriptions.)
2. Semi-durable goods - items that will last 3-5 years (think men's shoes, clothing, and technology devices.)
3. Durable goods - things that last for a very long time, 10+ years (think houses, furniture, and appliances.)
A progression has happened in the last few decades, where consumers are spending less on durables and more on consumables. Many now spend upwards of 50-70% of their income on consumables, and with this in mind, trust in the banking institution is of the utmost importance. Fundamentally, money represents safety, consumers want to protect it and make it grow. Because of this, the banking and financial sector must make sure that trust is the #1 factor when determining branding, marketing, and advertising needs. Consumers want to be "safer through their money." The psychological magnitude behind money is massive, and people want to protect and grow their money, which is why banks and financial services are so important to them.
In the past few episodes, we established that fiscal management has been the weakest discipline of most sectors, but not for the banking and financial service sector. They are at the greatest advantage for fiscal management, due to their main business being money. If a business goes to a bank and asks for a service, like a loan, the banker's job is to sell the product: money. They then get paid with the interest rate. With this method of revenue in mind, bankers and investors must look at many factors when determining loans to make sure they are making a safe bet. Part of being fiscally responsible is loaning money to people that can be deemed as "safe."
As ProfitSee works primarily with accountants, bookkeepers, and consultants, what is the impact of these banking services to you and your clients? Because the average accountant's every day job functions are changing and getting commoditized, they must find new services to offer. Just as the consumers are looking at the future, accountants must as well. Forecasting and budgeting into the future for businesses is the next big step that all accountants must make, helping businesses and their future money. To do this you must work with banks, portfolio management companies, investments, etc. When loans are in mind, you want to make sure you're meeting all your fiduciary responsibilities with advising for or against loans, and other business decisions. Remember, money is the glue that binds all of these businesses together, so make sure that you are able to help build a safe and reliable future for your clients.
Start your complimentary trial of ProfitSee today to see how you can help protect the money your businesses make and create safety in the future: myprofitsee.com/trial.