Any behavioural scientist will tell you that if your body language mirrors a significant other for a period of time a subconscious bonding takes place that creates empathy and rapport. Why, then, does the financial services industry not take this into account, particularly when it comes to customer service proposition design?
Our latest research testing the findings of the Financial Advice Market Review against what clients want and need shows that despite great work by the industry on individual professional development we still have a way to go for firms themselves to showcase professional service development.
The diagram below shows adviser firms are still fairly transactional in their approach to meeting client needs and are yet to gain a full understanding of what they prize and value and how this can be incorporated into the service proposition.
There is a clear divide between what firms do for their clients and what their clients actually want and need. For instance, where the adviser firm spends plenty of time is in the fact finding and financial plan building activities. When we ask firms if they feel this is a highly valuable activity from the client’s perspective, they tend to agree.
However, clients tend to value the touchy feely stuff. They enjoy receiving tailored strategy and advice, and the ongoing relationship building. What they fundamentally need is an answer to the question: “Am I going to be OK?” So what can be done about this disconnect?
It has been raining regulation over the past five years. From the RDR to the FAMR recommendations and MiFID I and II, we are seeing a barrage of the stuff hit the financial service industry. Although there has been a need for more structure and strategy to aid consumer protection, this has also stifled innovation and client engagement.
That said, the FCA’s sandbox and Project Innovate (which will start to gain ground this year) showcases the regulator’s desire to change with the times and meet consumer needs for streamlined, tailored services and products that offer value through ease of access and fair costs.
Aligned with playing in the regulatory sandboxes, we now have a great opportunity with the growth of financial technology and its ability to engage clients in their day-to-day financial decisions. Much has been written about gamification, yet research has shown the average age of a person that plays phone apps is 37. This means it is not just the millennials who will benefit from such tools.
We have been banging on about this for years but it is the adviser firms that can offer a professional practice via a highly personalised planning process that will gain success. As we can see from the diagram, clients prize the soft stuff. They want to feel their adviser has their interests at heart.
Most firms are very good at nurturing deep and trusted relationships. However, with the advent of the internet and instant access to information, as well as technology that offers a seamless experience between offline and online services (think client portals) firms need to become more consultative in their approach to meeting client needs.
The industry has been a tad like a father dancing at his daughter’s wedding after he has had a few when it comes to expressing itself. What it requires is a nuanced approach that incorporates consumer needs and embraces the technology evolution that can offer bright, shiny, engaging tools to encourage a culture for savings and investing. The signs are there but serious dancing lessons are required before professional service firms can evolve into truly client centric propositions.
Chris Davies is managing director at Engage Insight