Want to Know How to Embrace Client Experience Thinking and Techniques?

The wealth management industry needs to remind itself– said the FCA at Compeer's compliance 2016 event earlier this month – what the new rules under MIFID II on cost disclosure are trying to achieve. The overall point being “to help the consumer understand the costs and charges”.

The FCA has already said it won’t be providing a set format on charges so firms are free to approach this creatively but, crucially, "from the perspective of the consumer". This is a crucial point.

The FCA is very keen to see firms get more creative with their communications as June 2015’s discussion paper on smarter consumer communications outlined. It is also clear that they would like communication to be more than one way asking firms to think about testing communications on customers to see if information is really “cutting through”?

This sentiment is very aligned with MIFID II requirements for example the need to evidence that clients have accessed an online valuation. Merely putting the information out there won’t be enough and in my experience of portals for wealth management clients and asset management customers, only a minority of core enthusiasts can usually be persuaded to use them habitually.

Given the huge investment that firms will have to make in MIFID II there is a strong business case for using the opportunity to improve client communication and engagement. Client engagement (rather than mere satisfaction) correlates better with the sort of behaviours we’d all like to see – retention, greater share of wallet and that all important referral and advocacy behaviour.

Despite the fact that most firms would cite referral as their main source of organic new business growth, few firms have a structured programme around referral and client advocacy.

An audit of all your client communications and touchpoints as part of a MIFID implementation programme ought to be an early stage objective. Creative ideas will only come from taking the client's viewpoint however. Digital challengers are doing just that but their cost of client acquisition is high. Incumbents have an opportunity to identify what their clients’ value and where they need to invest in client engagement to ensure they not only protect their existing client bases, but accelerate their organic growth.

Applying client experience thinking and techniques, including journey mapping and client research might yield useful insights that not only smooth MIFID implementation and reduce risks, but actually yield commercial value.

Six initial ideas to consider:

Involving clients in the conversation around how costs and charges work and creative ways to illustrate and explain them, as an opportunity to reiterate your value proposition to clients. Involving younger clients in looking to the future of client communications around MIFID is an opportunity to address concerns about the next generation’s tendency to disengage from their parents’ advisers as co-creation of communications ideas and propositions can help bond clients to you.

Looking at ways to use the requirement to obtain more information from clients as an opportunity to improve insight on client needs and share of wallet opportunities.

The need to issue valuations more frequently provides a requirement and an opportunity for greater continuity of dialogue than is possible on a six monthly basis on the ongoing value of what you are doing for clients.

Firms will need to look beyond online portals and email. Secure mobile instant messaging applications offer speed and cut through which is potentially appealing vis-à-vis the reporting obligations on significant losses in respect of portfolio management or contingent liability transactions. Similarly a greater use of video calls and webinars can provide instant “face-to-face” reassurance and reaction.

Artificial intelligence may have a role to play – see RBS’s Luvo project and Atom Bank’s “AI bot” within its mobile app. Hotels often have much to teach other sectors on customer services so Hilton Hotel’s Connie is worth noting also. None of this is designed to replace the personal touch but for firms whose clients need to access information out of normal office hours particularly, supplementing direct relationship manager contact with alternative ways to engage will be key.

Creative learning programmes for clients to develop their understanding of the information they are being provided with at their own pace over time may be a worthwhile investment - see Bank of America’s BetterMoneyHabits work with online learning experts The Kahn Academy.