We ignore the lessons of BHS and Austin Reed at our peril
No matter what industry you happen to be in, says Tim Sargisson, the moment you stop being relevant in the eyes of your customer you are going to struggle
In my previous article, I discussed this year’s Personal Investment Marketing Show, better known as ‘PIMS’. Among its benefits is the opportunity to use the convivial surroundings to put our industry under the microscope and inevitably, by the end of the evening, discuss how to solve all problems and put the financial world to rights.
The conversations can be quite limited and tend to be parochial in terms of the financial world. So I posed a question – how can it be that two businesses, with a retail pedigree that stretches back more than 200 years, face disappearing off our high street? Not to mention all the other familiar brands that have gone the way of all flesh – Woolworth’s, C&A, Littlewoods, Kwiksave … the list goes on.
One or two people were quite prepared to argue the example of the high street has no bearing on financial services. Taking such a simplistic view, however, ignores the plain fact that once you are no longer relevant in the eyes of your customer you will struggle whatever industry you happen to be in. BHS and Austin Reed lost their relevance and sadly no longer resonated with their customer base.
The fact is that, everywhere we look, customer expectations are evolving. Expectations are not fixed and our business models must also grow to ensure we remain relevant. Within our world, consumers want and expect more from their wealth, and also from those who advise them.
This increasing demand is coupled with a lingering suspicion of the investment community among consumers that follows decades of discontent, with investment professionals seen as pushing particular products and the customer feeling they are being force-fed solutions.
We may be four years out from RDR but consumers are still suspicious and question whether investment recommendations are in their best interests or those of the adviser. It is a case of the scent of the commission or fee overcoming the odour of deceit. As an industry we must continue to do everything we can to focus on doing what is right for the consumer.
Putting the past folly and abuses of our industry to one side, however, it is the failure to understand the customer’s needs that is the number one reason why clients will part company with their adviser, or fail to engage in the first place.
The market is out there
We know the market is out there – two-thirds of the UK’s liquid wealth is held by just 11% of the population, typically aged 55 and over. These are the very consumers who are likely to spurn ‘robo-solutions’ and engage real people to help them.
Furthermore, the number of customers approaching advisers to request a transfer from a DB to a DC scheme has increased by 246% since pension freedoms were introduced in April 2015.
Nevertheless, research as part of the FAMR highlights that only 20% of the over-55s have actively sought advice or guidance. This is worrying and illustrates how the adviser community is in danger of going the same way as the high-street dinosaurs.
The key to recognising this challenge is understanding that this segment of the population has a distinct set of expectations and are seeking an adviser who can really deliver on four key fronts:
* Understanding: An adviser who seeks to build a deep understanding of their goals, personal and financial.
* Guidance: Helping the client on how best to achieve their objectives.
* Education: A better-educated client who is better informed facilitates better decision-making.
* Clarity on costs: It is not simply an FCA requirement that we are clear on how much, when and what for. Customers also demand to know how much, when and what for.
And when it comes to the subject of costs and charging … well more on that next time.
Published on 23rd June 2016
