Tailor making products to fit client’s needs

There is no getting away from the fact that innovation is an integral part of the financial services industry.

It is imperative for product providers to incorporate innovation into their products to give their existing clients the best possible financial solutions, while continuing to attract new business.

However, there is a perception that some financial services providers are so focused on developing innovative products that the end-client experience can sometimes be overlooked.

Going back to basics

Globally, consumers are now demanding simpler, modular solutions which leave them in control of their financial affairs. The growing popularity of online financial advice and passive funds is a clear indication that South Africans are looking for uncomplicated financial services.

Nonetheless, there are still financial products in the market that are arguably too complicated and opaque for many potential clients to understand, or which have terms and conditions rendering them possibly unsuitable.

Clients often do not get all the benefits as per the advertisements, as most products are designed as package deals where the client only receives the full benefits should they remain the perfect client and never claim or make withdrawals; which are the very purposes the product was intended for.

Making the change

Normallyfinancial services products are launched and marketed as offering numerous new features and benefits which inevitably encourage consumers to change product providers.While it does make sense for consumers to upgrade their financial products in the same way as they upgrade their cell phones from time to time, it is vital to determine whether that new product is more appropriate for the client’s needs. Not all products are suited for all clients.

The financial services industry has long suffered from over complication and further innovation could be intimidating to some consumers.That is why financial planners play such an important role.The financial planner should demystify the proposed products and ensure that all products owned by the client always allow them to achieve their financial objectives.

Many financial products are still too complex in this digital era in which the focus is on simplicity. Financial service providers should be leveraging new technologies to simplify processes and to create systems that are not administrative-intensive.

However, in contrast, there is also the potential risk of oversimplifying products. The financial planner’s ability to simplify products should not fool clients into underestimating the complexity that sits behind the financial planning process.

Open your ears

Product providers need to spend more time listening to financial planners to get a sense of what their clients really want, as opposed to convincing them which products to sell. This will allow the industry to see a measurable shift in focus from product-driven sales to client-driven advice, resulting in the implementation of appropriate products.

This is where the value of advice comes in, clients have to receive the right financial advice to help ensure that they can maintain or improve their standard of living. The new-generation of lifestyle financial planners can guide clients through their different life stages and protect them from making poor decisions and buying unnecessary products. These lifestyle financial planners are not product salesmen. They will first clarify the client’s financial health before making recommendations that are both relevant and understandable to the client.

The intention should be that the client will not be persuaded to buy products that will result in the most commission for the adviser, but that the client will get the solutions that they actually need.

While product innovations are not only welcome but essential in this complex industry, financial institutions need to ensure that both the product provider and the client will benefit from newly implemented innovations in an effort to avoid churning. However, technology is having a real impact on the industry.