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Letter to the editor: Uncomfortable with client segmentation

Dear Sir,

This seems to be the new buzz word in financial services when applied to investment and pension propositions.  However I am very uncomfortable indeed with this concept. 

I wasn’t aware that treating customers fairly was now consigned to the rubbish bin.  How is it then that if a client has say, for example, £98,000 to invest, he gets a lesser service than somebody who has £101,000 to invest, or indeed any other demarcation you may wish to consider.  I well understand the commercial impetus and that firms wish to be more efficient,  but if a client is worth having I would maintain he is worth treating properly.  ]

If you don’t want a client or feel that they are not worthy of your best efforts then don’t take them on.  I would have thought that is fairly simple.  Somebody that has £50,000 values their money just as much as somebody who has £500,000.  To each individual their money is of equal importance, so why should we treat them any differently? 

No doubt there will be many who will undergo logical, and dare I even say it, ethical gyrations to justify providing some clients with a more offhand service than others, but I for one cannot see how it is justified and wonder quite why the regulator is prepared to stand by and let this happen.

Harry Katz

Norwest Consultants

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Well said Harry. There is nothing wrong with segmentation but the way it is being implemented is generally wrong and the blame for this lies with many so called consultants. We segment our clients but the criteria used are different from that used by most firms. Having discussed their circumstances and future needs and following our recommended actions we agree with our clients what future (on-going) service they will receive, how much it will cost and how they will pay for it. Generally clients will fall into several categories which in a sense is client segmentation but some clients receive a bespoke service appropriate for their needs. All this is pulled together through an efficient time planning (servicing) system. So whether a client has £50,000 or £500,000 they get the service they have agreed. That is profitable TCF.

  2. If I was to take a train from Guildford to London (perhaps to meet with Harry for that drink he promised me!!) I would have a choice of paying one price for my ticket if I went standard class and a higher price if I chose 1st Class. In other words I would self-segment mself

    I don’t think we should be uncomfortable with segmentation and I also don’t think it is about treating one type of client unfairly compared with another. TCF was never about treating all customers the same. I do take Harry’s point though which is a need to avoid any kind of inadequate service

    If someone is prepared to pay me more than someone else they will get an enhanced service that is simply the way the commercial world works.

    If someone with a smaller investment fund wants to pay me the same as someone with a larger investment fund they can have exactly the same service as the other client.

    I think where segmentation is less acceptable is where the client gets no service and yet continues to pay as if they were. I don’t have problem with “segmentation” I do have more of a problem with so called “passive” income

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