Client engagement – it’s time for new tools
Financial advisers have been dissecting the topic of client engagement for decades, and with good reason; client engagement is the bedrock of effective and sustainable adviser/client partnerships, and those who crack the code can enjoy spectacular business success and rewarding relationships.
But while some fundamental aspects of the engagement code remain unchanged (understanding the psychology of your client, active listening, remembering their milestones, generally being interested in their lives), others have evolved, disrupted by digital technologies, increasing consumer expectations, and even a pandemic.
The time is now right for financial advisers to reassess their client engagement strategies and review the tools they have at their disposal to drive next level engagement in a COVID world.
Satisfied clients aren’t always engaged clients
As we are regularly told, engaged clients are more satisfied, more loyal, more trusting, more likely to refer, and, ultimately, more profitable. In the absence of any universal metric of client engagement, it is not uncommon to infer engagement levels from measures of client satisfaction. And, on that basis, one could assume Australian financial advice clients are incredibly engaged. After all, in a 2019 survey[1], 94% rated their advice experience either good or excellent. And 95% said they trusted their adviser.
But dig a little deeper and we see the picture is a little less rosy. Only two thirds said they would recommend their adviser to friends and family, and, even more alarmingly, more than half said they didn’t have definitive loyalty to their adviser (Figure 1 below).
Many advisers have themselves admitted client engagement is something they struggle with; a study of over 200 advisers found that 60% were spending less than 3 hours per week on client engagement, with many citing a lack of time and a lack of expertise as major impediments to client engagement activities[2].
So, is the solution to better engaged clients as simple as spending more time on engagement activities?
Or does our concept of client engagement – and what drives it – need rethinking?
Client engagement as ‘co-creation’
Successful, engaged marriages do not result from fulfilling discrete ‘engagement’ tasks in some tick-box fashion; they result from the ongoing, two-way connection between two parties.
Similarly, rather than thinking of client engagement as being a standalone process – distinct from other elements of the advice process – and something to which we need to allocate specific time, perhaps we should think of client engagement as being the outcome of a philosophy, one we embed into every interaction and touchpoint that exists between the advice practice and the client.
So, what actually is client engagement? Among the extensive literature on the topic, this definition from 2011 is particularly useful:
“A psychological state that occurs by virtue of interactive, co-creative customer experiences with a particular agent/object (e.g., a brand)”.[3]
As well as conveying the idea of interactivity – important because it suggests someone is actually interested and invested – this definition suggests engagement is an outcome of ‘co-creation’; in other words, the customer experience is one that they feel they have had a role in designing.
While to many readers the idea of a co-created advice experience may seem far-fetched and impractical, when reframed as personal relationships and tailored service offerings, the concept becomes far more accessible.
Is advice really customer centric?
The term ‘customer centricity’ is thrown around so cheaply these days that it’s almost irrelevant. After all, what company would say customers aren’t at the heart of their business?
In a financial advice context, the regulatory requirement that personal advice be truly tailored to the clients’ needs, and that the adviser always acts in the best interests of the client, could be seen as ensuring a base level of customer centricity. But if we take a step back and view the financial planning process from the client’s perspective, is it truly customer centric? And is it really designed to encourage engagement?
Table 1, below, breaks down the typical steps in an advice relationship, and how it could be seen from both perspectives.
Even allowing for minor variations, the obvious point is that this process is not truly customer centric. No amount of cloaking the process with espresso machines, funky boardroom presentations and complimentary umbrellas gets away from the fact that it’s a modern-day version of Henry Ford and his Model T Ford (which only comes in black).
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[1] https://www.momentumintelligence.com.au/client-experience-survey
[2] https://www.futureofadvice.com.au/business-toolkit/latest-white-papers/client-engagement-guide/
[3] Brodie, R.J., Hollebeek, L.D., Ilic, A. & Juric, B. (2011), ‘Customer Engagement: Conceptual Domain, Fundamental Propositions & Implications for Research in Service Marketing’, Journal of Service Research, 14 (3).
[4] https://www.kitces.com/blog/reimagining-client-meetings-with-a-more-client-centric-financial-planning-process/
