Quality and differentiation are now becoming buzz words in the IFA sector.
How can firms of all shapes and sizes create a quality strategy for the
future which will give them a competitive edge?
There are only ever two ways of gaining a sustainable, competitive
advantage. They are doing it cheaper or doing it better. The problem with
doing it cheaper is that someone will always undercut you. As usual, those
with the greatest financial muscle tend to win.
In the overall marketplace, IFAs can be distinguished by qualitative
characteristics. These include independence and broad market knowledge. It
makes no sense to try to be the cheapest as well. We should leave this to
the discount houses and online fraternity. Having said all this, the drive
for quality should always result in greater efficiency.
Embarking on a quality strategy does not simply involve installing a
quality mentality among staff. An effective quality strategy must be
holistic, dealing with people and cultural issues as well as processes.
Quality begins with an understanding of what the client wants. Even today,
there is amazing complacency about this subject. “Of course we know what
clients want, we deal with them every day” is the mindset. Well, this may
be so but do we know which clients were delighted and which deterred by
their experience of our service? These questions need to be asked
repeatedly and the results objectively measured and analysed.
There is only one definition of quality – the client's. It may include
tangible elements such as speed of delivery, clarity of presentation and
breadth of knowledge. It may also involve a number of subjective elements
such as confidence and friendliness.
It is useless to ignore these preferences. This is because winning and
retaining clients depends on matching services as closely as possible to
their needs and preferences.
When we know what makes our clients happy, we have a quality shopping
list. The sort of “process features” clients may like could be efficient
service delivery, accurate records and clear presentations while the type
of “people features” they may like could be a friendly approach, knowledge,
flexibility and understanding.
Having established these “service standards”, we would have the basis of a
promise to clients. Underpinning this promise are the people in the
business and the processes which they manage. In financial services, the
processes are more rigidly defined than in most other sectors. Compliance
is a measure of quality and there are real penalties for failing to meet
the required standards.
Of course, what is seen as top quality today becomes the standard of
tomorrow and quality goals are continually set at new heights. IFAs should
be constantly reviewing the way they work to seek quality improvements.
Some are generated by legislation and some by industry-wide initiatives.
But all they do is level the ground. The IFA must look for ways of offering
a bit more than the competition.
Effective management of all processes is essential. But in the end, it is
the people within the business who must be committed to delivering the
Of course, this means ensuring all staff are properly trained and qualified at a technical level. It also means that attention must be given to developing their other skills, especially communication skills.
Bringing these thoughts together, the development of a quality
differentiation strategy is down to four Ps. These are purpose, processes,
people and performance measurement. When all four aspects are focused on a
clearly developed “service promise”, any business will stand out from its
competitors. Increasingly, this will be the way to win business in the