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The traditional manner in which clients are serviced, should be revised

Rob Macdonald

The first challenge that financial planners and wealth managers face in delivering good service to their clients is to overcome the legacy of the traditional manner in which clients have been serviced.

For many years, the profession has been, in reality, a distribution function for large institutions that provide a range of investment and risk products.

In return for commission, individuals masquerading under the label of “financial planner” or “wealth manager” have been peddling these products, sometimes to the benefit of the client, but not always necessarily so.

This may sound harsh, but I still regularly come across financial planners who operate on the basis of what is in it for them, rather than what is right for the client.

So the starting point for providing good service to clients is for financial planners to focus on their clients. This may appear so obvious that it is not worth saying, but the real experience of the client would indicate otherwise.

Research both locally and internationally indicates that the most desired attribute a client seeks in a financial adviser is being someone whom he/she can trust. It is not competence that clients seek first, but trust.

Obviously, competence is an important prerequisite for being able to deliver a good service, but if the client does not trust you, for he/she it does not matter how clever, experienced or equipped you are.

Trust, not competence, will be the ultimate deal breaker.

In contrast, how often do you hear people say they go to a doctor because they trust the person? It is more often the case that trust is a given, and that competence is the chief criterion upon which a medical professional is selected.

Unfortunately, truly professional advice-based financial planners do not always enjoy the same level of esteem as their medical counterparts.

This is thanks to the legacy that the industry has bestowed upon them, despite the fact that they have no desire to peddle products.

Emotions involved

It is also important to recognise that over and above the legacy of the industry, the reality is that people have strong emotional responses to money, and that dealing with money – by its nature – brings up trust issues.

The good news is that financial planners actually can provide a service that is based on building trust with clients. In fact, Bill Bachrach, a United States-based financial coach, has built a significant business around coaching financial advisers on how to become “trusted advisers”.

Often, people think that trust is something that is either there or not. You trust someone or you do not. Professionals such as Bachrach believe that trust is something you can be trained to deliver.

So, too, do the authors of a book entitled The Trusted Advisor, which provides lessons on how to build trust for professional service providers.

In their book, David Maister, Charles Green and Robert Galford offer a very simple model for building trust. In the model, they suggest that there are four key elements for building trust: Credibility, Reliability, Intimacy and Focus.

In order to build trust, a financial planner needs to say things that are credible, do things that are credible and provide credible advice.

For me, the best example of being credible is when a client asks what will happen in the future to, inter alia, the gold price, the rand/dollar exchange rate, or the share market; and the only credible answer is, “I don’t know”.

Any other answer lacks credibility because no one can predict the future, and any attempt to do so undermines an adviser’s credibility.

Reliability talks to the actions of the adviser in delivering his/her service. Are telephone calls returned? Are documents delivered in a timely manner? If the adviser says he/she will do something, do they?

Reliability is seen often by many advisers and clients as the key to good client service.

Which it may be, but if the objective is to build trust with the client, it is only one component of good service.

Intimacy is about the nature of the relationship between client and adviser.

In order for trust to develop, there needs to be a personal connection that enables conversations to go beyond matter-of-fact business matters.

People are emotional creatures. Money is emotive. Trust is an emotional concept.

Without some form of an emotional connection, it is very difficult to build trust.

Intimacy allows the adviser to become a confidante for the client.

Perhaps the most important of the four elements is focus. Because, ultimately, where the adviser focuses his/her attention – on the client or on themselves (and the products or expertise they have to sell) – will be the key arbiter of the extent to which trust is developed.

The legacy

As bizarre as it sounds, traditionally the focus in the financial planning industry has been on the product rather than on the client. A focus on the client ensures that any advice or product that is delivered, is done so to meet the needs of the client, rather than to line the pocket of the adviser.

So the more the client feels that the adviser is in it purely for the client’s best interests, the greater the chance of a trusting relationship developing.

Once the building blocks are in place for a trusting relationship to develop, then half the battle for providing great service to clients is won. Fortunately, the other half is simpler.

Research conducted by Nedgroup Investments and market research company Ipsos Markinor looked at what clients wanted from financial planners and how they experienced their service. Two key findings emerged from this research.

Firstly, as we would expect, trustworthiness is the most important attribute of a financial planner which clients seek.

Secondly, the greatest influence on their experience of the service they receive, is communication.

In essence, communication – which is at least transparent, regular and relevant – is the second half of the battle. Getting this right, no matter what is happening in the markets or with investment performance, or even when nothing is happening, will ensure a great service.

The importance of communication is highlighted by industry experts such as John Bowen of CEG, who recommends that financial planners should be communicating with their clients, in different ways, at least 27 times a year.

So the formula for delivering great service to financial planning and wealth management clients is simple: Trust + Communication = Great Service. The challenge is to get this right.

If this were easy, businesses and books would not be dedicated to helping advisers do it!

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