Growing your financial services business by understanding client expectations

*This content is brought to you by Carrick Wealth, leaders in wealth and capital management 

Two major factors will determine the survival, sustainability, and growth of the financial advisory and wealth management industry: understanding contemporary client expectations and a paradigm shift in regulation. In this second of a two-part series, Craig Featherby looks at a customer-centric approach to wealth management that is driven by corporate culture.

By Craig Featherby* 

The first part of this series examined the need for a paradigm shift in our approach to the regulatory environment. I argued that we needed to shift from the prevailing “gaming the system” culture to one that embraces regulation and builds on a corporate culture of trustworthiness, a quality which philosopher Onora O’Neill described as comprising honesty, competence, and reliability.

Craig Featherby

Let’s face it, the financial services sector – and independent financial advisers, particularly — have a tarnished reputation. (The CFA Institute Global Market Sentiment Survey 2015 reported that 63% of investors cited “the lack of ethical culture” as a reason for their lack of trust in the sector.) So, we need to ask, “What kind of business do we want that sector to be and what influence do we want to have?”

You can’t regulate culture

Regulation, however, is only one side of the coin. The flip side is culture. And culture can’t be regulated. But it can be created. A client-centric culture needs to be aligned with the corporate culture. As such, regulation is seen simply as a set of rules that guides what and how we operate and not as a restriction on what we do.

Simply announcing that you welcome the increased regulation, however, will not increase your client base or even help you retain existing clients. Many consumers, unfortunately, believe that “clever” advisers will always try to game the system and, in turn, them. The reasons for this are many: the incentive schemes/bonus culture for wealth managers or because managers are obsessed with the culture of “cost cutting”. (They ask the question, “How can I cut costs by 10%?”, when they should ask, “How do I get more bang for my buck?”. This is the real question about increasing efficiency and ROI.)

Today’s clients are well informed, have access to multiple sources of financial data, and they want to map their own financial journey. And we all know the numbers that are bandied about regarding millennials: that they are about to inherit a lot of money; that 69% of high net-worth millennials prefer to do their own financial research; and that 46% manage their own investments. But most important is that 53% seek out “knowledgeable” individuals for financial advice. Simply put, if we want to get their business we need to be part of that 53%.

Trust vs. Trustworthy

It’s more complex than that, however. Ask any group of eager wealth specialists what they think they are doing, and many will say, “We sell trust.” In other words, we expect our clients to trust us to manage their wealth. This is only partly true because millennials ask, “Why should I believe you?” before they even ask, “Why should I trust you?”

O’Neill, referring to the victims of Bernie Madoff, the man who scammed investors out of millions of dollars, said it would have made no sense for investors to have had greater trust in Madoff; they would have simply lost even more money. The not so subtle — but also not so glaring — distinction here is that Madoff “sold trust” but he was not trustworthy.

By its very definition culture is shared, from top to bottom and vice versa. We do not apply a higher set of standards to our personal life and a separate set of (lower) standards in our corporate environment.  We have a high set of standards. Period. And it has to be lived every day so that every one in the company understands “that’s how we do things around here”. To install a culture of trustworthiness, we must ask ourselves, “What should we do?” rather than, “What can we do?” Being trustworthy goes to the heart of what we should ask not only of ourselves but also of our employees, and must form an integral part of the customer experience. We must demonstrate our trustworthiness through every interaction and touch point. Our mantra is, “Culture drives conduct.”

Information vs. knowledge

As we have seen, clients are looking for knowledgeable advice. To be seen to deliver that sort of advice, we need first to demonstrate that we are trustworthy recipients of their enquiries, and second that our advice is trustworthy. In other words, we do what we say we will do (honest); we are professional and skilled at what we do (competent); and we do what is right, efficiently (reliable).

Being competent and reliable is a prerequisite for professionalism. The former can be taught and the latter ingrained through habit. Honesty, however, is more complex and is shaped by the corporate culture. For example, we may make an honest job of ensuring all relevant regulations are available to the client. But simply putting the information out there, it does not mean clients can make sense of it. We are in the knowledge business: we are the ones who should sift through and make accessible and intelligible the vast amounts of information — regulations, compliance, alternatives — so that the client is able to make a knowledgeable decision. And a decision that they feel is based on trustworthy advice.

That is the sort of business we want to be a part of.

  • Craig Featherby is the CEO of Carrick Wealth, a financial services provider and wealth management advisory, which he established in 2014, with the vision of creating an innovative, customer-centric company that sets the benchmark for wealth management across the African continent.
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