Afriendof mine recently went to see his financial planner for his half-yearly review. He reported that the meeting went well, his portfolio was reviewed, his current and future needs reinforced, and the relationship with his adviser and the firm strengthened.
He remarked that since working with this practice he has managed to not only get his financial life in order, but he’s also enjoyed the experience of working with his adviser. As a result, he has referred many of his friends in similar situations and is very satisfied with both the outcomes and the process of his relationship with his adviser.
Yet is this a common experience for the clients in our industry, or are our service levels as variable as the number of practices and models in the marketplace?
What we can say with confidence is that advisers today are operating in a much more demanding environment than they once were. In the main, customers are more sophisticated and educated, and are demanding a more professional and personal level of service.
The days of transactions only are quickly disappearing. Even the Government’s legislative changes within the Financial Services Reform Bill (FSRB) are aimed at improving the level of service and safeguards being offered to consumers of financial services.
Advisers must start focussing on servicing their clients better or risk losing business in the face of increasing competition. Clients increasingly want to work with a partner who understands their thinking, their needs and their aspirations, and who is committed to helping them achieve their financial, and in some cases, very personal goals. This is going to take time. Time to develop a relationship.
Consumers are becoming a lot more sceptical and they need to be able to trust their service provider, particularly with major financial transactions.
Our experience has shown that the more profitable adviser businesses are dealing with fewer clients and gaining more income per client, reflecting a more valued interaction with each client. This is based on the strength of adviser research being conducted by ING Adviser Solutions in conjunction with the Dashboard Company.
The research shows that high profit businesses are working with an average 20 per cent less clients but generating 80 per cent more income per client. The reality is that many businesses are simply working with too many clients within their current business structure.
It is obvious that every client relationship must be a profitable one and that advisers cannot possibly be all things to all people, nor can they successfully service all their clients in the same way. This just wouldn’t be logistically achievable or profitable in the long run.
As part of providing support to advisers, we have observed that many have not geared their business structures and processes to providing personalised and varied levels of service to their clients based on their needs and their profitability.
That is not to suggest that clients providing lower returns to the business should not feel like a valued client, but they may not warrant the same service that a more demanding client such as an investment client might receive. It is about providing the right type of service based on the customer’s needs in order to maximise the value of each client.
The key to offering quality service to a broad range of clients and to satisfying their individual needs, is to firstly determine the type of clients you want to deal with and then to focus on them, developing differentiated levels of service to satisfy them.
Determining which clients you will focus on will depend on a broad range of variables, including: the location of your business; the stage of the business and life cycle you and the business are in; the characteristics of your market; your own personal interests and likes; your skill set; and your overall business structure and capabilities.
Once this has been clarified, you can set about to source and attract the type of clients you have a preference for and which your business is set up to handle. To service them, you will need to have some clear processes in place and the staff to deliver your service promise.
Too many businesses fail to provide the kinds of service their clients seek due to simple system and process issues. This includes such simple things as no electronic customer data files, inability to e-mail easily and more importantly, simply not clarifying and agreeing to the level of service you will provide the client during the initial discussions.
Documenting the number of reviews you’ll undertake for your investment clients and the type of feedback you will provide in a service agreement is a simple way to manage your clients’ expectations and to standardise the type of service you will offer each of your clients.
Of course, there will need to be some focus on the types of clients you are working with. You will have to structure various offers to your clients based on their needs. For example, the level of service you may offer your retiree market may be significantly different to your wealth accumulators. In fact, through client segmentation, you may determine it is more profitable for you in your market and in your circumstances, to deal, for example, solely with the retiree market.
These are all-important issues that will impact on your ability to provide personal service to your clients and to make each transaction valuable for both parties. It is a two way street, and like any relationship, when one party isn’t happy, invariably the other isn’t either.
As momentum builds towards the milestones of the Privacy Act, PS146 and FSRB, you may find that now is the perfect time to take a look at just how many clients you are trying to manage and what each one is worth.
Richard Klipin is the head ofING Adviser Solutions inAustralia.
