Helping customers achieve their new year’s resolutions

Improving financial planning, saving more money and spending less are popular new year’s resolutions. While making resolutions concerning personal finances might be easy, for most consumers keeping them is the hard part. With many South Africans feeling the pinch after the festive season, this is the time of year to take a financial health check and plan for the year ahead. 2016 is pegged to be a challenging year for the economy, so taking stock now is a wise choice.

So how can financial advisors help their clients achieve their resolutions? The answer lies in providing clients with the tools and knowledge to set realistic and achievable budgeting and spending goals, helping them to better prepare for their future. It is equally important that those providing financial advice have a full view of a customer’s financial profile, so they can provide advice that is relevant to their needs and circumstances. Yet too few financial services organisations have the solutions in place to collate information which provides an accurate financial profile for their individual clients. This is partly a result of product-drive solutions that financial institutions traditionally offered, and also due to a lack of investment in the tools and solutions available.

While there is a growing trend to move away from product-driven services towards a more customer centric model, traditionally banks and financial institutions have structured their business around products. This model has created multiple silos within organisations, and ultimately a fractured customer experience. For instance a customer might have a bond with a bank, yet when they apply for a personal loan they have to provide all their information again, a frustrating experience for all. Furthermore, this may result in the delivery of pillared advice, which doesn’t necessarily take into account the customer’s full financial profile and their current circumstances.

While previously a full client financial profile may have been considered a ‘nice-to-have’ tool, the reality is that pending regulation is making it a necessary part of financial advice. In fact, the driving force behind the shift towards a customer-centric model is Treat Customers Fairly (TCF), an outcomes based regulatory and supervisory approach designed to ensure that specific, clearly articulated fair outcomes are delivered by financial firms to consumers.

The reality is that delivering customer-centric advice truly relies on the ability to create a single view of the customer’s unique personal situation. The advisor and customer should have a single view of the full financial household, including details of income and expenses, pension information, insurances, mortgages, current accounts and investments. This picture should be based on the fundamentals of tax and planning information. It also has the added benefit of creating the ability to better identify cross-sell opportunities.

We have seen in the Netherlands the measurable business outcomes that this offers, including a richer client experience, a better relationship between client and advisor and a significant increase in the sales figures of low cost, complex financial products.

With the technology available today, those seeking financial advice should insist that their financial advisor takes into account their full financial profile, before recommending financial products to them. And for the financial services industry, 2016 is the year to adopt solutions which enable the delivery of fair and understandable financial outcomes for all customers.