The great adviser-to-client disconnect

It is easy for financial advisers and insurance and investment product providers to get caught up in their own narrow version of what clients really want. As we power into the 21st Century, it is more important than ever for advice practices and firms operating in this competitive segment of the marketplace to align their products and services with clients’ evolving expectations. The recipe for success, according to Jeanette Marais, Deputy CEO of Momentum Metropolitan Holdings (MMI), is to “have an obsessive, compulsive focus on the client”. Marais, who was presenting to the 2022 Consult Conference, borrowed this advice from Jeff Bezos, founder of Amazon, a company that built its success on client centricity.

Making client centricity central to your approach

Client centricity is integral to success in the financial services sector too, whether as product provider tasked with structuring insurance and investment solutions, or as an independent financial adviser (IFA) placing clients in such products. Marais shared statistics from various studies completed in recent years including the 2016 ‘shocker’ that US1.6 trillion was lost by US companies due to clients ‘switching out of products’ because of poor customer service. Other studies showed that “client-centric companies were 60% more profitable than companies that do not care,” said Marais, who challenged the audience to find a financial services firm that did not put the client, client obsession or client centricity at the heart of its product and service offering. Winning advisers must ensure that clients emotionally connect to their value proposition. 

One of the biggest difficulties facing financial advisers and advice practices in aligning their value propositions with clients’ needs is the disconnect between what advisers and clients believe is important in the adviser-client relationship. A recent study conducted by Morningstar in the United States confirmed client centricity as the starting point for this voyage of discovery, before setting out to determine what clients want from advisers versus what advisers thought these clients wanted. And the differences were stark. The study started by identifying 15 services that clients might require from advisers, and then established rankings from an adviser and client perspective. These items, summarised as: 

1. Helps me stay in control of my emotions.
2. Great reputation and reviews.
3. Knowledgeable about tax.
4. Helps maximise investment returns.
5. Coach and mentor.
6. Approachable.
7. Helps reach my goals.
8. Easy to get hold of.
9. Transparent fee structure.
10. Understands my unique needs.
11. Uses latest technology.
12. Presents themselves professionally.
13. Unbiased.
14. Communicates and explains well.
15. Knowledge and skills. 

An unexpected miss-alignment of expectations

Marais asked the audience of mostly advisers to shout out which of the 15 points they thought would be most important to clients. The audience offered points 10 ‘Understands my unique needs’; 14 ‘Communicates and explains well’; and 5 ‘Coach and mentor’, in that order. This result aligned with the study… When asked which of the 15 points clients would value most, advisers participating in the Morningstar study also ranked point number 10 ‘Understands my unique needs’ as the most important. “I like this choice, because it describes what we all talk about when we refer to client centricity; but it turns out that clients’ needs are a little bit more basic than that,” said Marais. 

Clients participating in the Morningstar study opted for point seven ‘Helps me reach my financial goals’ as the most important and most valued role that their financial adviser played. “There is an amazing wealth of knowledge in this choice; the client is saying ‘understand me, help me define what my goals should be, and be with me on my journey as my life and my goals change’,” Marais said. This result was not the only surprise revealed by the study… For example, point four ‘Help maximise my investment returns’ was dismissed as unimportant by advisers, but appeared quite high up on the clients’ rankings, in position four. And the apparently important point five ‘Coach and mentor’ was dismissed by both camps, coming in in last place. 

Coaching and mentoring should be rated higher!

Marais was surprised that point five fared so poorly. “I think that coaching and mentoring is central to the new world of financial advice; financial advisers serve as both coach and mentor to their clients … and a big part of wealth management is to prevent clients from taking hasty, ill-informed decisions,” she said. The level of coaching and mentoring necessary to ensure optimal client outcomes requires financial advisers to free up time to focus on advice-giving rather than administration and compliance. Sadly, a comparison of the early 2000s to today showed that the amount of time spent in client-facing engagement was declining. The best way to address this shortcoming is for financial advice practices to adopt digital capabilities wherever possible. 

“Financial service providers know that our survival depends on our ability to give financial advisers the best tools available; we operate in a highly competitive world [that requires] advisers to start changing their behaviour in terms of their approach,” said Marais, who advocated trusting in and adopting the digitisation process being rolled out by the product provider over time. Her final advice was for advisers to think about what a client-obsessed mindset meant to them. “Define the term ‘client-obsessed’ and understand it … listening to angry, irritated, upset or fundamentally unreasonable clients imparts more knowledge than the great accolades you get from clients,” she concluded. 

Writer’s thoughts:
The result from the Morningstar study of adviser and client expectations of financial advice roles was telling, illustrating how apparently aligned stakeholders often approach the same issue from totally different positions. One would certainly expect advisers and their clients to be in alignment over the main outcomes and / or requirements of the advice process… Do you think it is important for financial advisers and their clients to be aligned insofar as the most important adviser roles? And which of the 15 points resonate most with you? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.

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