New Generation Firms-Client & Stakeholder Engagement

Following on from the first 2 keys to developing a professional services firm we move to our 3rd, client and stakeholder management and engagement.

In our market survey covering 11,000 regulated adviser firms this particular section scored the worst. Surprising when we consider advisers and planners are pretty adept at relationship building skills.

On closer scrutiny it appeared that 50% of firms surveyed were not clear on the relationship type they want to have with their clients. Evidence includes low scores on client segmentation and understanding client profitability.

Less than half of firms were confident that clients truly understood the value of their service proposition and only 27% were confident client understood adviser charging.

I wont print the results when they were asked about the quality of communications with the regulator!

The following comments illustrate the key issues here:

“ Advisers have been very internally focused on doing the basics to get across the RDR finishing line. Now we need to market what we do”

“We have lots more to do to convince clients of our value”

“Our client engagement process and client agreements still need a lot of work”

“We have to get to understand how online and social media can help us”

Whilst there is still a lot of basic work to be done by firms to put some of the tools and requirements in place and to make business processes fit a professional service firm model, we can see some of the more enlightened firms are now addressing some of the key client relationship issues which will add value to the firm.

Communication, brand and relationships will be a key lever of success in 2014 and beyond as firms seek to differentiate between competing offers.

Key ways firms can bring this about include:

  • Using smarter techniques to assess the value of what at we call “Client Relationship Capital” as opposed to the purely financial value of the business placed with them. A focus on developing strategic and partnership relationships was one key standout here
  • Recognising the key points in the customer journey (such as the engagement process) and using client engagement letters and client agreements as key relationship building opportunities – not just a compliance burden
  • Using social media and other enabling technologies to work together to deliver enhanced customer service and improved brand
  • Engaging with some of the new generation thinking and “communities of practice” networks and new generation client relationship management technology

Where the FCA are concerned, well, as they now have banned an adviser and fined him for poor process and inappropriate investment recommendations, adviser firms need to ensure they have clear systems for communicating process and data management and take their regulatory engagement seriously.

Other stakeholders need to be managed very carefully. With the regulator scrutinising inducements and marketing allowances due diligence is key for adviser firms to ensure they have clear processes in managing external stakeholders.

Overall, planners and adviser alike are actually well placed to enhance their relationship capital with their clients and stakeholders. The strategies to do so will be covered next week as we move into the 4th key: Client service propositioning.

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