An adviser worth their salt: Understanding the impact of the outside

Hannes van den Berg, CEO at Consult by Momentum

Someone once said, “It is only when you taste your own cooking that you’ll realise you’ve forgotten the salt.”

This wise someone is none other than the formidable Jeanette Marais, Deputy CEO of Momentum Metropolitan, and was delivered as part of a presentation she gave at the recent Consult Annual Conference, which addressed challenges and opportunities within the financial services industry. Jeanette maintains that to genuinely understand your client’s experience when they engage with your business, you must step into their shoes. Only then will you gain the perspective you need to objectively look at what you’re getting right – and more importantly, where you’re going wrong.

Why is client-centricity so critical? Research done by Deloitte has shown that client-centric companies are 60% more profitable than competitors, while a Gallup analysis reveals that companies which provide an emotional connection with clients outperform the sales growth of their United States competitors by 85%.

As an industry, we’re often found guilty of being too product-orientated rather than client-focused. We arrive at our clients with our bag of products and a general idea of what we feel they should purchase, rather than viewing our product suite in the context of their needs and building a solution specifically designed with these in mind.

The upside and downside of the outside

Premising the need for greater client-centricity is a financial services landscape that has changed significantly. Before the pandemic, digital transformation – heralded as key to the future of our industry by just about every stakeholder – was happening at all the speed of a century-old glacier. Covid-19 put the pedal to the gas, and advisers, for the most part, responded admirably, swiftly moving their processes and client interactions to digital channels. This had pros and cons on either side of the fence: on one hand, time spent in commute or lengthy meetings was reduced, but less face time often comes at the cost of genuine client intimacy.

This shift also coincided with a plethora of new, direct offerings entering the market. Banks and insurers, no doubt realising that their clients were becoming increasingly inundated with too many choices and too much complexity, decided to shorten and simplify the product menu. Again, there are upsides and downsides attached to this: complexity is rife in a jargon-loving industry such as ours, but the downside of a far simpler value proposition is that clients may mistakenly believe that the role of the intermediary is redundant. This, in turn, narrows the full estate view that a well-equipped professional adviser could offer.

Finally, global economic turbulence has created a more uncertain client, and with this, a greater need for consistent, clear communication. There is currently a lot of negative news and noise around the markets, which can cause even the most stoic of investors to second-guess themselves.

Advising the adviser

We shouldn’t view these paradigm shifts as a threat, but rather see them as the opportunity they represent.

To date, the general adoption of digital tools and fintech across the industry has been slow. Recent Kitces research reveals that a typical adviser spends about 40% of their time on administrative activities; about 10% on investment management-related tasks (for example, investment research and trading), and 50% on direct client activity. However, an important caveat worth noting is that when you dive into this 50% client time a little deeper, you will see that only about 30% is spent on meeting with clients; the rest is dedicated to client service activities, such as preparation and analysis. Aligning with product providers that offer leading technology solutions and sound investment solutions would free up a great deal of time to focus where it matters – on our client.

Tech also creates avenues for us to access deeper client data, allowing us to tailor-make better solutions for our clients. By that same token, simplifying and streamlining our offerings and improving our communication to clients would allow us to do what we do best: add value through sound, personalised, expert advice.

Another area that needs possible reassessment is the number of product providers we engage with. There is a perception that having access to a full basket of products from multiple providers creates independence, where it can place a huge administrative burden on the adviser. Here, I would suggest partnering with a small and select pool of providers that are on a clear digital journey and have the infrastructure, products and platforms that will add value to you and your practice.

Finally, we should never underestimate the importance of face time and regular conversations in establishing a deeper connection with our clients, allowing us to understand their goals. While this shift in focus may not earn us money – at least not immediately – it will contribute to a more sustainable industry. After all, an adviser worth their salt is one who offers seasoned guidance.

ENDS