Banks and financial institutions shell out huge sums of money year after year on introducing new technologies and processes aimed at making them more efficient and profitable.
At the end of the day, however, this industry is all about people and the relationships and promises that are made to customers.
Small operational enhancements amount to nought if financial advisory companies fall at the first hurdle, or any subsequent hurdle for that matter, in acquiring and retaining would-be customers.
Service-based industries are different to their product-driven counterparts as every stage of contact presents a potential breaking point that could drive customers away.
Unlike products, where ongoing customer loyalty and affection are largely built around the reliability and quality of the product, a service industry, such as financial advice, is hard work and in Australia relies on the ability of its more than 15,000 practitioners to strike trusting and meaningful relationships with customers to generate loyalty and to drive repeat purchases (ongoing advice).
Many industries invest a great deal of time and effort in measuring the dynamics of customer acquisition and leakage, but this to date has been conducted piecemeal in the financial advice sector.
With this in mind, CoreData has conducted a study that assesses some of the key decision influences during the process of acquisition stage.
Despite the fundamental role advisers play in the financial services industry, it seems there is an element of randomness in the standards of service being offered by the Australian planning industry to consumers.
This is one of the drawbacks of an industry based on delivering advice, selling dreams and building towards those dreams.
Methodology
This research stems from brandmanagement’s annual financial planning mystery shopping project called Weightless World.
This project has been running since 2003 and is designed to give dealer groups an accurate snapshot of how well their sales channels are performing in absolute and relative terms.
The research is based on the outcomes of 600 mystery shop events of the nation’s planning industry using real shoppers.
Real shoppers are defined as individuals who are either looking for financial advice or currently have a planner and would consider changing.
Shoppers also had to meet other criteria – age and asset test – to qualify as valid shoppers.
By using a large team of mystery shoppers who are actually in the market seeking financial advice and have the aim of taking on a financial plan, the research is able to build an accurate picture of the sales channel efficiencies of the Australian advisory industry in terms of acquiring clients.
The mystery shoppers go through the process of making an appointment, getting to know a planner, building a relationship and then potentially building a plan and making an investment decision.
This gives participating advisory companies a picture of the behaviours and habits of their advisers when dealing with potential new clients.
The project allows for the benchmarking of advisers split by dealer group against the broader market on a number of variables from a customer perspective – giving dealer groups an industry perspective of the relative efficiencies of their sales channels against the rest of the market.
Dealer groups will be able to understand the differences between management’s view of the habits and practices of their respective sales channels and the reality revealed through the mystery shoppers going through the sales process and benchmarking and recording every aspect of the experience.
Critically this includes not just the sales efficiency but the ability of advisers to deliver the service within the frameworks set out by all the relevant legislation.
