Better Business: Meeting clients' service demands

As clients demand more efficient and cost-effective advice, advisers must think carefully about how they deliver their services.

“May you live in interesting times.” So goes the English translation of the famous Chinese proverb (or curse). Often reiterated through history by luminaries as diverse as Robert Kennedy and Terry Pratchett, it is easy to see how it could relate to the current and impending situation in UK retail financial services. RDR will certainly act as a driver for change as we move to a world in which adviser charging sits alongside a higher requirement for qualifications.

But RDR is not the only relevant precursor of change. Customers themselves are changing. In fact, if we look at the global economy over the past 40 years there has been a clear and seismic shift from a product-focused world to one which places the customer at the heart of everything. Financial services has been relatively slow to make that move: we still talk about ‘arcane’ products with ‘complex’ names that do not resonate particularly well with the general customer base.

A survey by Which? last year showed 75% of customers were worried about the value of their pension, and 65% did not trust the banks to get the best return. Another piece of research from Credit Action showed 32% of people would fail to meet their current living expenses in the first month if they lost their income. So clearly the required financial protection is not getting through to the end customer.

The internet has been a massive contributor in rebalancing the power between customer and supplier. There is evidence of this across many different markets, such as books, music, supermarkets and clothing. It is now beginning to find its way into financial services.

Web of change

The best example so far of this is probably in the general insurance space. In a little less than a decade the marketplace has changed fundamentally. Now 86% of customers research online first, with 49% actually buying online too. Many potential customers are looking to the internet both as a source of information but also as a way of keeping the costs of advice low. A Compeer study in November 2008 showed 44% of adults view the internet as an essential source of financial information and advice.

Of course, the real danger is consumers will turn entirely to the internet and end up self-servicing inappropriately for the wrong products and at the wrong time. So this is not a time to fear the internet but a time to embrace how advisers can play their part in facilitating the new world of financial advice. A part of this will involve using the internet to deliver a new standard of customer service at an appropriate cost.

There is a new focus on the ‘cost’ of advice and delivering the advice effectively and efficiently to customers. Obviously the flip side of that is not to forget the value of that advice. When selling any product or service it is essential to demonstrate value first. New style platforms are one route to the changing marketplace where costs are lower and integrated technology can provide an effective advice process. The traditional marketplace is also reinvigorating its approach to delivering strong service models underpinned by contemporary technology.

Technology for business

The processing of advice and new business will need to be clearly and effectively managed. The use of sophisticated technology will be pivotal in this brave new world. For many (larger) distributors, this technology should be capable of working in a multi-channel distribution environment. For all distributors, delivering business in a more cost-effective manner, where transparency of information is essential.

Stripping out costs will be important both to distributors and manufacturers. Technology that helps bridge the gap in these working practices will therefore be essential to ensure the economics of the business model do not collapse.

The technology of choice should be set up to ensure the right elements of data are collected. This can be attained through the use of configurable workflow. The strengths of the underlying workflow technology are key here. It should be extremely sophisticated to allow distributors to succeed in the multi-channel world. It should be configurable for the different types of business and sales/advice, as well as to ensure the full collection of data.

Transparency of information

Transparency of information should allow easy access to view relevant data by people who should be able to view that data. There are at least two potential groups of people who could require views on this data: one is staff/advisers, and the other is the clients themselves.
Your staff and advisers should be able to view the data wherever they are without resorting to expensive communication systems (the web is an ideal platform for sharing this information).

Furthermore, if you enable your clients to gain easy access to the data that you are happy for them to view (such as fact finds and portfolio reports), you can then provide a significant improvement in transparency.

Toolsets for TCF

Such clarity and availability of information is key to both RDR and TCF. This kind of functionality allows you to set up your own website and allow individual clients to log on from their own homes to a secure area to view and, if you allow it, amend their data. It will also allow you to define the kinds of guided sales activities with which you wish to provide your clients.

Sophisticated and integrated toolsets will help with the provision of excellent advice and ensure the customer is treated fairly. When this is combined with production workflow and configurable CRM/database technology, the overall package should deliver excellent results to distributors of all sizes.

Overall, it is essential advisers look hard at the way in which they deliver their services today and how those could or should change for the future. There is a lot of talk in the marketplace about customer segmentation, but it is essential advisers do not fall into the trap of thinking they should just ‘drop’ their bottom-end clients. Understanding the new model is key as it will allow advisers the means to deliver a holistic service in the way in which clients want, and most importantly at an effective price.