JUST as the Financial Advisers Act (FAA) was being drafted into law around 2001, there was some debate as to which type of institution - bank or insurance company - was more likely to succeed as a personal financial adviser. Both types of businesses are custodians and managers of retail investors' money. Today, it is clear that insurance advisers are way ahead of bankers in the advisory arena, even though insurance has had its share of mis-selling fiascos. Banks are at a crossroads. While they certainly have the opportunity given the wealth of deposits entrusted to them, there are no short cuts in the financial advisory route. Just as they routinely admonish customers to shun the get-rich-quick route, they also have to brace themselves for slower returns from the advisory business if they are serious about rebuilding trust.

Insurance companies' efforts to instil discipline into their sales process - requiring, for instance, a consumer fact-find - predates the FAA. The same cannot be said for bank processes. The mis-selling scandal that burst into prominence with the ill-fated Lehman Minibonds had its roots several years ago and was hardly confined to structured products. Even with the FAA in force, banks' due diligence on customers' circumstances was cursory at best, if done at all. Some bank relationship managers (RMs) were said to have sold products even before filling in the necessary risk assessment and fact-find forms, which they treated as a bureaucratic formality. Those lapses, thankfully, should be a thing of the past.

But now in charting their way forward, banks will have to examine just where their strengths lie in the context of the individual saver's spectrum of needs. In the case of insurance, a core protection product lends itself particularly well as a risk management tool in individuals' financial plans. From there, it is a short and rational step in the direction of retirement savings. As deposit takers, banks can likewise begin to extend themselves into longer-term savings, but the jump is not as simple as it seems. While clients accept that buying insurance is a long-term commitment and are then predisposed to share personal details on their cash flow and other assets, that is not necessarily the case when the entry point for an adviser is via deposits.

Yet another issue is the longevity of sales staff and commitment to personal service. The insurance model is one where advisers are paid mainly on renewal commissions. It is thus in their interest to sell regular premium plans, and to conscientiously keep in touch with clients to review their circumstances and needs. Banks will need to nurture a similar commitment among RMs rather than today's revolving-door culture. They should encourage long-term savings plans where core products may well be staid and plain-vanilla, rather than one-off thematic bets. What is certain is that those who are determined to make financial advisory a core business will grapple with increased scrutiny and higher standards of practice. Those standards are long overdue.