Better Business: Meeting Client's Service Demands - 03.06.2010
IFA Online
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.