Archive for the ‘Client Experience’ Tag

Rebooting wealth management firms

It’s never been tougher to be a wealth manager. A significant growth in assets under management over the past seven years (last week’s correction notwithstanding) has not translated into suitable top and bottom line growth. Many industry observers blame this on structural challenges that belie an easy fix and are not going away in the short term. To reboot profitability and position their firms for growth, wealth managers should go back to the fundamentals and re-examine where and how they compete.

Every company is experiencing strong headwinds including market uncertainty, insufficient scale, poor brand differentiation, fee compression, and rising costs (for regulatory compliance, information technology, etc.). On the horizon is another threat, technology-based “robo-advisers,” such as Toronto-based startup Wealthsimple, which use an automated platform to target specific, tech-savvy segments with a focused value proposition and lower fees.

It is the three “M” wealth management firms — mid-sized, me-too and middling — that face the greatest business risk. They can no longer be all things to all clients or get by merely on the strength of personal relationships. Their best approach would be to go back the fundamentals: re-examine the segments they pursue, choose the best value proposition for the target client and build the capabilities needed to deliver it. While each firm will define their own approach, they may want to consider two strategic opportunities:

The gender gap Most wealth management firms lack the practices, understanding and tools to satisfy and address one large but relatively untapped segment, women. Women create, control and influence a huge amount of wealth — upward of 39 per cent of U.S investible assets, according to research from the Center for Talent Innovation.

The research found that 47 per cent of U.S. female wealth creators (53 per cent globally) and a shocking 75 per cent of women under age 40 do not have a financial adviser. Among the U.S. women that do have an adviser, 44 per cent report they are not understood by their adviser. There is no reason to believe that Canadian female clients are managed or treated any better than their U.S. or global counterparts.

Wealth managers need to gain a deeper understanding of women investors’ needs, requirements and fears using quantitative and qualitative research (advanced tools like ethnography can help here). Insights and lessons can be gleaned from industries such as automobile and consumer electronics that have pioneered female-friendly marketing and product design. Tactics could include: crafting more gender-neutral messages and imagery, employing principles of behavioural finance to remove hidden bias, training advisers in gender-smarts and creating a more collaborative and inclusive client experience.
To best capitalize on this opportunity, consider customizing products and services to suit women, including creating a risk profile that is markedly different (according to a study from consultants BCG) from one created for a man.

“We discovered early on our female clients have unique needs. They look for more collaborative, education-focused advisers with a holistic, long-term approach to financial planning,” said Jennifer Boynton, an investment counsel at Toronto-based RealGrowth, which is growing by focusing on addressing the needs of female clients. “Addressing these needs, while still meeting their investment targets, has enabled us to consistently exceed acquisition, retention, and most importantly, client satisfaction goals,” she said.

Build digital capability Given the wide range of consumer activities that can be done on a smartphone or desktop, it’s surprising that digitization has advanced so slowly in this space. While incorporating new technologies can be difficult, it no longer can be put off. Doing so will help you remain relevant and attract key segments such as high income digital natives or millennials who are very comfortable performing day-to-day activities online.

Furthermore, going digital is vital for streamlining back-office operations, enhancing reporting and improving data and analytics capabilities.

Digital tools can provide clients with mobile, real-time and user-friendly views of their portfolio (including value, costs, transactions) along with self-serve options for research, recommendations, buy/sell and support. Advanced data analytics can be leveraged to proactively tailor your investment advice and content based on each client’s profile, or support internal investment decisions. Finally, many wealth managers can make better use of social media networks to disseminate information, build moderated communities of interest (say around tax planning) and gauge investor sentiment and needs.

When it comes to realizing the digital dividend, the secret is to understand your client’s needs, and build back from there. That requires companies to create a 360 degree review of each client’s assets, requirements and behaviour patterns, an understanding of existing processes and a willingness to re-engineer the client-experience model (including practices, culture and policies), before exploring technology solutions.

Simplicity drives sales

Virtually every company shares one goal:  increase revenues by better delivering on customer needs.  To this end, marketers will regularly add product features, tweak their brand messages or increase product availability.  A no-brainer approach, right?  Wrong, according to new research published in the Harvard Business Review.  Besides generating excessive operational complexity and cost, this strategy is turning off the very customers you are trying to keep and sell more to.   The better strategy would be to simplify your offering, streamline the purchase experience and optimize the amount of information provided.

New Research

The study’s authors looked at buying behaviour though a typical purchase cycle.  In the U.S., Australia and the U.K., 7,000 consumers (plus 200 senior marketers) were given pre- and post-purchase surveys on their attitudes and buying experiences (e.g., information gathering, product evaluation) of different products across a variety of categories.  Specifically, the CEB wanted to know what made some customers “sticky” (i.e. follow through on an intended purchase) and others not.  Studies like these are important for companies looking to maximize sales opportunities, improve customer satisfaction and boost returns from marketing and IT investments.

Surveys says...

The findings are thought-provoking.  Managers think that most consumers want more product information and choice, to participate in a community and stay connected through social media.  The research found that the opposite is true. Many consumers feel overwhelmed by information and are confounded by the purchase process.  They don’t want a relationship with a company.  Rather, they only seek services and messages that facilitate an easy buying decision and transaction.  These include a simplified buying process, less (but more relevant) information and greater visibility into available discounts.

A wealth of academic research has found that offering excessive product choice or complicated messages leads to consumer indecision and angst, and ultimately less satisfaction with the process and the products themselves.  Our firm has seen similar results in packaged goods, retail and IT firms during complexity reduction and client experience projects.

At the root of this paradox is the differing perceptions of what the customer really wants and needs versus what management thinks they want and need. This mismatch has many causes.  Proper customer research is not undertaken often enough to keep pace with evolving customer needs.  In other cases, organizational factors such as departmental or management bias, cultural practices or compensation schemes generate an impetus for more products, messages and processes.  Finally, complications inherent in business these days – think technological change, channel proliferation and inflexible infrastructures – virtually guarantee more complexity, minimal integration and less consistency.

Keep it simple, Stewart

Smart firms make simplicity a goal in itself.  To simplify the buying experience, we recommend managers follow these three basic steps:

Update

Company’s need to be vigilant that what they are saying, doing and selling is aligned with what consumers really want and when they want it.  As such, marketers should regularly update their knowledge of consumer needs, requirements and online behaviors by looking at a variety of data sources including CRM data, social media activity and independent market research.

A holistic analytical lens can lead to some interesting learnings.  For example, some auto manufacturers, travel businesses and retailers discovered that the platform used for searching product information plays an important role in the timing of the purchase. Specifically, 70% of people who use a mobile device for search are hours away from a purchase.  On the other hand, 70% of people who used a desktop for search are roughly seven days away from a purchase.

Optimize

Too many brands lead consumers down unnecessary and frustrating purchase paths or clutter their message with too much information. This can be fixed by providing better navigation and search tools that enhance the buying experience.  These tools would guide consumers to the right products by helping them evaluate available choices, choose relevant features and provide trustworthy external input. Furthermore, managers would be wise to benchmark their buying process against industry best practices from companies like Amazon, Victoria’s Secret and Intuit.

Reduce

Less is often more.  Product managers should periodically cull under-performing products, prune the amount of information provided and scrap redundant marketing & sales programs that add more confusion than revenue and value.  Firms should institute and enforce guidelines to prevent this complexity from returning. Finally, companies should standardize on proven, simplicity-enabled products, messages and practices and roll them out throughout the organization.

For many enterprises of any size, increasing simplicity is the new black.  Getting to the ideal purchase process will require managers to conduct unbiased consumer analysis, simplify the buying experience and product portfolio, and have the fortitude to prevent confusion from creeping back in.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.