CPD: Rediscovering the “why” – how giving clients what they want can make your practice perfect

Has the advent of technology and a preoccupation with compliance caused advisers to lose sight of what clients really want? And if so, what can we do to get back to basics?

In recent years the advice industry has been dominated by two major concerns. One is technology and how best to assess and adopt it. The other is the overriding imperative for compliance. And while we’ve seen much commentary about the impact of both factors on business models and practice management, we’ve seen far less about their impact on something that is arguably just as important: that is, advisers’ mindsets and the satisfaction they get from serving their clients.

The sheer volume and scope of industry change has profoundly affected how advisers operate, from the way they segment and service their client book, to the prevailing investment philosophies, to the very minutiae of day-to-day work. And, far from easing up, the pace of the changes which began to emerge less than ten years ago is only accelerating and will likely continue reshaping the “how” of the profession.

Time to get off the hamster wheel

So, has this been a change for the better?

Many would argue that it hasn’t. The constant preoccupation with compliance, the need to learn and relearn new systems and processes, adopt new technology – sometimes seemingly for its own sake and without any discernible benefit for either client or adviser – has been a cause of undeniable frustration. It has in some cases seemed to be almost an end in itself. Many advisers report sometimes feeling caught up in a hamster wheel, running in place rather than moving ahead to expand their practice and profitability and to deliver what they’re there for: client satisfaction and support in meeting their financial goals. In other words, at times losing sight of the all-important “why” of what they do.

The good news is that as an industry we are now well positioned to stop focusing so much on the “how” and return to the “why”.

Our industry is more agile and more accustomed to change on the legislative and regulatory front, including thanks to input and relationships forged at policy-making level. When it comes to technology, there is greater clarity about what solutions represent real value for client, adviser and overall practice.

Wants versus needs and why it matters

If we do take the “why” of the profession as delivering quality advice that supports clients achieving financial goals while delivering us rewarding and satisfying careers, then the first question we need to ask: what do clients really want?

There’s an old customer adage that rings true for our industry now more than ever: “I don’t care how much you know until I know how much you care”. Because, despite all the noise, the change and the complexity, what clients want is someone who cares, pays attention and can deliver not just what they “need”, but what they want.

What’s the difference? It’s cause and effect, theory and practice. So, while we may know and tell clients what they “need” in the language and requirements of our own profession: risk profiling, diversification, asset allocation, CPI+ returns and so on, where we may fall down is in showing clients – or asking them – what it all means to them. Or how all it can equate to giving them what they “want”, things like peace of mind, empowerment, confidence in their future, understanding of their circumstances, someone with whom to share thoughts and ideas about their financial future.

Speak to you clients in terms of what they “want”, bring it home and make it personal to them and you will soon find they are way more responsive than if you delivered them a terse SoA or a hundred spreadsheet pages.

Segmentation: the secret truth

Integrally linked to the idea of giving clients what they want is another that should resonate with most advisers. As we all know, it’s common (and good) practice to segment clients into groups, generally in line with their net worth, which tends to dictate the type and complexity of investments and service they need to achieve their goals.

Sounds good so far, right? And yes, when done properly it is. The problems occur when the work essentially stops at the segmentation itself and is not also reflected in the way each group is serviced. Typically, for example, the higher value “A” and “B” segments will be serviced by the practice’s lead advisers, leaving the “C” and “D” segments to employed planners and qualified administrative staff. The problem with this strategy is that despite the differences between segments we persist in trying to service all clients the same way, albeit with resources charged at a lower rate.

Here we encounter three issues. First, why would what works for one group work for another with different characteristics – including differing abilities to pay for their services? Clearly a different approach to different segments is needed to ensure all clients get what they need … and want.

Second, if you as practice principal don’t want to deal with a “C” or “D” because the “same same but different” approach simply isn’t cost effective, why would your staff?

And, last but very far from least: the reality is that no matter what segment a client falls into, they all have “A” level goals and aspirations. A “C” or “D” client has no idea they are a “C” or “D” but their aspirations are every bit as valid and heartfelt as those of the high net worth “As”.

Balancing the equation: introducing the new world of smart solutions

For advisers then, the challenge becomes finding what their clients “want” then balancing that with a level and type of service that gives clients the best chance of achieving it. From there, it’s important to explicitly demonstrate to clients – no matter what their segment – that you do in fact understand what they want and the advice you are giving is aimed at moving them nearer to that goal.

Dealing with the As and Bs on this personalised basis has generally met with the cost benefit tick. For the Cs and Ds however, the combination of high volumes and low balances has made it a near impossibility – and as a consequence both clients and advisers are often missing out. (See more about how to solve this here).

That is where technology can come in to deliver something far more than just a compliant generic SoA which doesn’t reference clients’ “wants”, something that’s very hard to get your client excited about or engaged with beyond the first year, at least.

In fact, the better digital advice options out there should now be helping build intel on what clients want, inexpensively and at scale. How? Simply by asking them. The client can be serviced and approached based on their own wants rather than with an obligatory generic follow-up – usually met with an unsurprisingly disengaged response – every two years.

By way of example, at Ignition Wealth we have developed a client portal that enables clients to complete a financial snapshot to help them understand their current position. This is a white label solution that can be branded for any practice. Clients can then send a question to the practice to ask for assistance in a certain area, based on their situation. The portal can be pre-loaded with prompts on the most common client goals, whether saving for a rainy day, a holiday home, to boost cash flow, to meet super goals and so on.

Another example is getting smarter about the way you communicate with clients, once again giving them what they “want” as well as what they “need”. Again, this can be achieved digitally and at scale, once clients have relayed their “wants” and they have been collected and stored. So, for one client, we developed a one-page Financial Plan. All the client “needed” was listed on the left-hand side, information such as life insurance, super balances, mortgages, parents and children’s ages, bank account details, employment details and so forth. However, instead of leaving it there, we also listed all they “wanted” on the right: holiday house, private school fees, longer term retirement goals and the rest.

What does it all boil down to? Not so long ago, the goal of paring back the layers of complexity in advice, meeting the rigours of compliance, addressing the constant “choose me!” shout of technology, seemed beyond our reach. Now, we’re facing a very different reality, one in which the pace of change can be better matched, giving our industry the golden opportunity to remember why we’re here: to give clients what they really want.

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