Monthly Archives: July 2018

Advisor Fintech: Three Ideas for Capturing the Promise and Avoiding the Perils

TD Ameritrade Institutional’s FA Insights study (summary here) offers the following nugget regarding firm profitability:

Firms that focused on adding younger clients (under 55 years old) grew 2x faster than other firms…but were 1/3 less profitable than those serving older clients.

This is hardly surprising, as older clients have more assets and are likely to have settled into a consistent servicing process. The challenge is that attracting younger clients is necessary for the long-term health of the firm. Moreover, the asset profile of younger clients is not really something that firms can control so it’s difficult to affect the revenue side of the profit equation. That leaves firms with a need to reduce the costs of acquisition and servicing.

Fintech to the rescue?

The promise of fintech offerings – software that handles functions like client onboarding, risk assessment, financial planning and portfolio management – is to deliver cost savings through automation and digitization of these manual, time-consuming processes. The result: improved profitability.

The problem is that fintech only solves problems once it is successfully implemented. Until that point, it is an investment without a clear return. Even more importantly, software represents a solution for advisory firms, not necessarily their clients. There is a lot of wishful thinking behind the assumption that younger investors will universally embrace technology solutions. In fact, a recent survey of millennials (supported by other surveys as well) reveals that they WANT human interaction.

This isn’t to say that there aren’t plenty of opportunities for firms to introduce cost-saving technology AND enhance the client experience. The client onboarding process – e.g., capturing and transferring of financial documents – is a great example how software can facilitate a quick, smooth transition and lead to greater client satisfaction. But one example does not make the case. Moreover, even software that sits at the “sweet spot” of client experience enhancement and firm cost savings can be a false idol if it is difficult for clients to use.

Pre-empting fintech failure

The point is that just because technology offers the potential for benefits doesn’t mean that it automatically will. Firms need to have a realistic view of the potential benefits and risks and have a game plan for minimizing the possible disruption of valuable client relationships.

We recommend the following as key elements of that plan:

  1. Form a “technology council” – develop a list of trusted and valued clients who represent a cross-section of your client base and solicit their feedback on technology options
  2. Invest in onboarding and training – don’t assume that clients will be able to figure it out themselves; develop materials to make it easy to get started and provide ongoing support
  3. Monitor usage and satisfaction – just because you’re not hearing complaints doesn’t mean they like it; actively seek out information and feedback that can identify issues and best practices

These efforts will go a long way to ensuring that the benefits that should accrue from technology don’t get eroded by unanticipated problems.

The Marketing Power of Case Studies

Case studies—aka client success stories—are an invaluable way for companies to market their solutions and position themselves with target segments.  They provide a number of specific benefits:

  • Helps make the intangible tangible. Clients may not fully comprehend the value of your solutions when they scan your website or read your collateral.  This is particularly true for service companies whose solutions are by their nature intangible.  Case studies help bring your solutions to life by showing how they have been successfully applied to address real-life challenges.
  • Highlights your ability to solve challenges.  The benefits and key applications of your solutions will resonate more with clients and prospects when the cases show how you were able to tackle—and solve—specific business challenges.
  • Captures the voice of the customer. Case studies that discuss solutions based on real-life business challenges help reinforce your customer-centric positioning.
  • Supports your targeting efforts. Because clients and prospects tend to connect best with stories about companies that share similar characteristics, case studies should reflect your key target segments (industry, geography, size of business, function within organization, etc.).
  • Promotes the power of teamwork within your organization. Case studies that highlight the roles played by various departments in helping clients overcome business challenges can both boost employee morale and foster greater collaboration between groups within your organization.

Unfortunately, due to poor development and execution, many companies fail to leverage the power of case studies.  The following are some key considerations for optimizing returns on your case study investment:

  • Create a situation-approach-outcome structure. Start with a short summary of the client’s situation and relevant challenges.  Then describe how your approach in partnership with the client addressed these challenges.  Finally, document the results. And remember, outcomes can be quantitative (e.g., increased sales, reduced costs) or qualitative (e.g., client testimonials on the value provided by your company).
  • Develop succinct messaging. Our media and information consumptions patterns have changed significantly over the past decade. Business executives simply do not have the time or inclination to wade through long descriptions. To be effective, individual sections (situation, approach, outcome) should be descriptive enough to enable the reader to retain the overall narrative, but be easily scanned.
  • Design your case study to be more appealing to viewers. Mirroring the need to adapt messaging to changing information-consumption patterns, deploy a range of visual methods. Enhance the visual appeal of printable case studies: Incorporate headings, callouts, charts and images, different colors and font formats/sizes to better capture the reader’s attention and to promote important elements of the case study. In addition, many online case studies feature videos of clients discussing their successful projects.
  • Weigh the pros and cons of featuring real-life clients in case studies. Many case studies feature videos of real-life clients who discuss their business challenges and their partnership with the company. These often resonate well with your other clients and prospects, and can enhance your credibility and illustrate your focus on customer needs. However, note that there can be some drawbacks. One is time (clients often have lengthy and restrictive approval processes). Another is that other viewers may perceive the featured client as having such a unique set of circumstances and challenges that they are not pertinent to their business. An alternative is to consider using “anonymous” case studies or developing narratives around a series of client personas that are representative of your typical client base.
  • Market the case study through multiple media. Case studies work well across multiple marketing channels, including your website, social media platforms, podcasts, webinars and live events.  In addition, incorporate case studies into new business presentations, RFPs and proposals to support your sales efforts.

Focus on the Customer Experience to Boost Bank Competitiveness

Several factors are leading banks to increase their focus on enhancing the customer experience. Many have taken a more customer-centric approach to regain trust following the Financial Crisis. There has also been a shift away from an overarching focus on new customer acquisition and towards optimizing customer lifetime value.  And banks are looking to counter the increasing competitive threat posed by FinTech firms that promise to manage all their clients’ financial needs through a single digital platform.

There are several ways banks can benefit by integrating an understanding of the customer experience in solutions development and delivery.

  • Change customer perceptions. Build systems and strategies around the customer experience that retains your traditional strengths (trust, experience, product breadth and expertise) while tackling some of the more negative perceptions of the sector (slow moving, inwardly-focused).
  • Differentiate yourself from other banks. To fully embrace the customer experience, you may need to make significant changes in many areas, including organizational structures, marketing, sales and service. And be sure to plan carefully. These types of changes often come with a number of barriers (including organizational inertia and lack of senior management buy-in) and, unfortunately, many banks fail to make the transition.
  • Optimize customer lifetime value. By understanding customer needs and challenges at various stages of the customer life cycle, you can reduce customer churn, while improving cross-sell/upsell rates.
  • Integrate your sales and service channels. One of the key selling points of FinTech firms is their commitment to providing a seamless customer experience on their platforms.  Though banks have traditionally struggled to integrate their digital and human channels, many surveys have shown that customers do use multiple bank channels. Banks that can provide a seamless customer experience across their various channels can both increase customer satisfaction and gain a competitive advantage over the FinTechs.
  • Capture the voice of the customer.  By developing opportunities for customer feedback at all sales and service touchpoints, you can gain real insights into customer needs, behaviors and preferences; identify gaps in these areas; and incorporate this intel into developing new products and enhancing existing solutions and service.
  • Leverage internal stakeholder insights.  To gain a strong understanding of how to improve the customer experience, gather detailed insights from front-line sales and service staff who can offer unique perspectives.  Along with the voice of the customer, use these insights to develop more informed product development as well as marketing, sales and service initiatives.
  • Optimize return on investment.  Identify areas that have the greatest potential for enhancing the customer experience, and redirect investment to these areas.
  • Create customer advocates. Engaged customers who have a consistently positive experience often turn into advocates (on social media, through word of mouth, etc.) and may even become referral sources.