Have you forgotten about your client?
The compliance and operational challenges facing 21st Century financial and risk advice practices often shifts focus away from the critical dual roles of offering impartial, quality financial advice and implementing needs-appropriate financial solutions to clients. No surprise then, that the Financial Intermediaries Association of Southern Africa (FIA) 2022 Advice Summit singled out client centricity as among the dominant themes affecting intermediaries and product providers today. Being able to meet evolving client needs enjoyed as much exposure as ‘big picture’ issues like climate change, cyber risk, digitalisation and sustainable underwriting.
Strive to be the most responsive to change
Dipesh Radia, Chief Commercial Officer at Momentum Insure, wasted little time in creating context for his presentation to an audience made up of mostly FIA member intermediaries, by sharing two quotes. The first quote was by evolutionary biologist Charles Darwin (1809-1882): “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change”. One need only replace the phrase ‘of the species’ with ‘financial or risk advice practice or product provider’ to make this quote relevant to today’s financial services providers (FSPs). The argument being that those who embrace and respond to the myriad changes introduced by regulation and technology will always be leaps ahead of their competitors.
The second quote was by management consultant and educator, Peter Drucker, who wrote in his 1954 book titled ‘The practice of management’ that “the customer determines what a business is, what it produces, and whether it will prosper”. It always amazes how a short, powerful phrase can so accurately capture a critical component of a successful business regardless of the industry or sector that business operates in. An intermediary that places the client at the centre of its financial or risk advice processes will prosper, undoubtedly. Take a moment, dear reader, to reflect on these two quotes, because although the remainder of the presentation was a trifle generic, the gems contained in the opening two slides were anything but!
Six steps to customer centricity
Radia followed up his introduction by proposing six ways through which FSPs can ‘bake’ customer centricity into everything they do. First and foremost, businesses need to strive for enterprise-wide agility. “The Agile Business Consortium defines business agility as ‘agility in an organisation’s culture, leadership, strategy and governance that adds value to all stakeholders who operate in uncertain, complex and ambiguous environments’,” he said. McKinsey and Company, meanwhile, called on global insurers to “scale agility enterprise-wide” and ensure that agile methodologies are seeded across functional units within the business. FSPs that adopt an agile approach benefit from bringing products to market faster; delivering operational efficiencies; simplifying governance; and de-layering organisational hierarchies, among others.
Getting customer insights right was short-listed as the second of six customer centricity drivers. According to Radia, despite understanding the value on offer from customer insights, only about a quarter of agile firms take the time to engage customers directly to obtain this feedback. “The bottom line is that those who neglect customer insights risk missing out on a fundamental pillar in the quest to deliver value to clients in the shortest possible time,” he said, before advocating not being afraid of ‘big data’ as the third important factor. “Apart from unlocking better client experiences, the various tech-backed innovations can also help FSPs in our quest to towards individualised product development; but we must be willing to leverage the big data opportunities that these innovations bring,” Radia said.
Some fun with modern day wordplay
This writer must confess to cracking a wry smile every time he hears the phrase ‘big data’. Although often using the phrase when reporting or writing on developments in the financial services industry, he ascribes to the view that there is no such thing as ‘big data’. Rather, we have butchered the more correct albeit lengthier phrase that reads ‘a lot of data’. Of course, this would not be the first time that a phrase or word gets swatted down for some or other expedience. Case in point, the adoption of ‘Ombud’ by the South African regulators due allegedly to an issue with the assumed gender non-neutrality of the word ‘Ombudsman’. Alas we digress; time to move on to item four on the list.
It is important, according to Radia, that FSPs allocate enough time and resource to the budgeting and funding of projects, with the idea being to prevent unnecessary delays in client centric innovations due to project funding mismatches or shortfalls. “Across the industry, organisations are exploring ways to deliver product solutions and value to clients … the problem is that traditional funding methods are unable to match the speed and agility of execution elements, thereby defeating the purpose of adopting an agile methodology,” he said. “The way that we set budgets and fund projects needs to adapt accordingly”. Point five was presented in the context of leadership guru Simon Sinek’s ‘Start with Why’ methodology, namely that FSPs must know their purpose to truly be client centric.
“Being truly client centric requires a shift in organisational culture, a move from being target and deadline driven, to being driven by what adds the most value to our clients; a powerful way to achieve this shift in culture is to clearly define our why,” said Radia. “A clearly defined purpose is the glue that bonds us to our clients and to our employees; it acts as a galvanising force that brings our employees together to serve the client”.
Human attention is a scarce commodity
And with that, point six flashed up on the screen: focus on excelling in the ‘attention economics’ field. Those unfamiliar with this phrase will enjoy the following insightful definition, courtesy Wikipedia.org: “Attention economics is an approach to the management of information that treats human attention as a scarce commodity and applies economic theory to solve various information management problems”. FSPs must, therefore, focus on the marketing messages they convey to potential clients and the medium used to deliver said messages. “With consumers being bombarded and sometimes irritated by an overload of information from different advertisers, is it not time for insurers and intermediaries to turn their attention to the trust economy?” asked Radia.
“Those of us who have been in the industry for years appreciate that relationships and trust are central to our clients’ purchasing behaviours,” concluded Radia. “It is time for us to go back to the basics and return to the foundation that the insurance industry was built on: relationships and trust”. All that remained was to produce a quote to match those shared in the opening paragraphs, which was supplied courtesy consultant and futurist Patrick Dixon, who said: “In banking or insurance, trust is the only thing that you have to sell”.
Writer’s thoughts: There are many fancy ways to define and establish relationships with potential clients; but when all is said and done, it is those businesses that get the basics tenets of client centricity right that prosper. Do you agree with the six steps to ensure client centricity, offered up in this piece? Or do you prefer to focus on the age-old premise of relationships and trust to build your financial or risk advice practice? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].
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