Advisers have an edge over the rest of the financial services industry when it comes to building trust
Last month, PR firm Edelman published its annual survey of public trust. It found financial services is people’s least trusted industry. This is not very surprising. Indeed, it echoes research we commissioned from YouGov last year, which showed 70 per cent of people have a negative opinion about financial services.
The problem lies in the relationships firms in this industry build – or fail to build – with their customers. You build trust by building positive emotional connections with people. Financial institutions simply are not set up to do this.
But advisers can build personal connections. People want someone to guide them through a landscape they find off-putting and populated by companies they do not trust.
Advisers versus banks
A good adviser shows understanding, warmth and empathy. By contrast, institutions are driven by process and a narrow focus on finding efficiencies. Short-term profits take priority over long-term relationships.
Consumers want a smooth and painless experience, yet everywhere you look there is friction. It is hard to feel warmth towards a company that makes your life harder. And it is hard to trust a company you do not feel warmly about.
There is also a sense that the industry has, in effect, outsourced its conscience to the regulator. Consumers suspect firms do the right thing more because they have to than because they want to. Imagine meeting a person who was like that. Would you trust them?
No silver bullet
So what can firms do about this cold feeling towards financial services?
A common industry trait is to see technology as the source of all improvement. So-called robo advice is an example of this approach, with new entrants seeking to use automation to improve the customer experience.
But technology can only ever be part of the solution. It cannot address the trust problem. A computer cannot show empathy and understanding, and clients will still look for people with these qualities to help them make decisions with confidence.
So, despite the hype we sometimes hear, advisers are not about to be replaced en masse by machines.
But that does not mean they should ignore technology. Far from it. New entrants to financial services, from challenger banks to peer-to-peer lenders, are creating great, friction-free customer experiences. They have well-designed websites, they work seamlessly on mobile and they allow clients to do what they need to quickly and easily.
It is forcing established players to up their game. Over time, clients will come to expect this level of experience across the financial services industry, including from their adviser.
New technologies also mean advisers can now think big. Established companies tend to think incrementally. Look at the way the car industry responded to electric vehicles. At first, they ignored them. Then they came up with hybrids – the least amount of change they felt they could get away with.
Then Tesla came along with a mission to make every single vehicle in the world electric. Now big car companies are struggling to catch up. The Tesla of the advice market would set a target everyone thinks is impossible, like going from 150 clients per adviser to 500, or even 1,000. Crucially, they would aim to do this while also improving the client experience.
How? By using technology to become three or four times more efficient. Technology can do 90 per cent of the heavy lifting, freeing up the adviser to build deep, meaningful and trusted relationships with clients.
Simon Rogerson is chief executive and co-founder of Octopus Investments, part of Octopus Group