Beyond Trust Build lasting relationships and brand loyalty by delivering superior client experiences

Beyond Trust Build lasting relationships and brand loyalty by delivering superior client experiences

Build lasting relationships and brand loyalty by delivering superior client experiences As the dust has settled in the wake of the financial crisis, a new landscape has been emerging. This post-crash world has been shaped by multiple forces, some directly related to the crash itself, others having little connection. Regulation is more intrusive and there is increased pressure to strengthen risk management practices. Tighter economics continue to squeeze the industry. In addition, competition has intensified, with new firms moving into the advisory business, challenging the traditional model. Changes in client expectations and behavior represent perhaps the most significant shift in this new world. The focus on regaining client trust in financial services organizations has finally begun yielding results, but trust is now only part of the equation. Continuing advances in technology present the industry with a unique set of challenges, but also offer tremendous opportunity moving forward. Firms that are innovative and embrace these opportunities to elevate client experiences will likely move to the front of the pack. To help wealth management firms deliver superior client experiences within an advice-led sales and distribution model and realize the benefits, Accenture has identified a three-step approach. This approach Know the Client, Reach the Client, and Deliver the Experience can help firms improve client retention as well as retain their top advisors. Page 2 Build Lasting Relationships and Brand Loyalty by Delivering Superior Client Experiences

First: Know the Client The ability to recognize and understand each client s needs and intentions is the first step in delivering superior client experiences. Deep insights into each individual client begin with recognizing the clues that identify the investor segment to which that client belongs. Behavioral analytics can help firms and their advisors predict how clients react to personal life events, such as marriage, childbirth, and becoming empty nesters, as well as to external events such as changing market conditions. These insights can allow the advisor to offer relevant advice and products and appropriately manage client relationships. Know the Client INNOVATION & IMPACT Reach the Deliver the Client Experience The new digital experience Clients needs and expectations are changing as they become accustomed to a richer, more diverse, omni-channel experience for financial transactions and communications. While not all rely on new digital and social channels for help in making investment-related decisions, a growing investor segment, which we identified in a recent survey, 1 is rapidly moving in this digital direction. In keeping with the findings of the survey, we have labeled this group Generation D (Gen D) (see Chart 1). This emerging and growing cross-generational segment currently represents 75 million investors, with more than $27 trillion in assets. More significantly, Gen D also represents more opportunities for firms to collect data due to their omni-channel engagements through multiple devices and to push more appropriate and contextual data to clients through their preferred channels. The fact is that omni-channel digital client interactions can be a two-way street. Not only does this new model present clients with a choice of where and how to gather information and interact with their wealth management advisory firm it also has the potential to offer financial advisors tremendous insight into who their clients are, what they are looking for, and what they want and need. In this new environment, advisors can use those insights to tailor the client experience to each individual, retooling advice-led sales and distribution for the digital age. The prize for those who get it right: new clients, deeper relationships, and improved client loyalty and retention. Regardless of client segment, the clues and cues that will enable firms to know their clients better and improve the client experience will come from technologydriven analytics. Firms that prevail in this area will do so by effectively managing client data through integrated CRM, as well as household and relationship views. Chart 1. Demographic Mix of Participants of the Generation D Online Survey 25% 25% 5 Millennials (21-30 years old) Gen Xers (31-45 years old) Boomers (46-70 years old) Page 3

Second: Reach the Client Many clients are no longer interested in the traditional client-advisor relationship; rather, they want to be recognized and catered to in a whole new way. They expect their advisor to take time to understand their individual needs and offer them insightful advice on how to achieve their financial goals. They assign increasing importance to decisions impacting their financial well-being; further, they desire portfolio transparency, as well as access to advice and information on their terms, wherever and whenever they want it (see Chart 2). Consequently, they are looking for a firm that will provide completely customized financial solutions at an affordable price that reflects their value. Recognizing this new reality, wealth management firms and advisors can place a focus on channel integration, optimizing communication through digital, mobile, and social channels and verifying that they remain relevant to these clients. Clients in this new environment have expressed an interest and receptiveness to utilizing a broad range of digital options for delivery of financial advice and education, including: Online communities where investors could interact with each other and financial professionals S Online video series and one-off videos Online seminars or webinars Virtual meetings with advisors Investor-led online education Connections via social media, e.g., Facebook, Twitter, LinkedIn, Firm/ Advisor Blogs, etc. Advisors catering to this growing client segment have also expressed an interest in being able to use digital and social channels for internal collaboration within firms, sharing leading practices, improving sales force effectiveness, and connecting to the back-office to enhance support and service channels. A new generation with new expectations Research into the attitudes and beliefs of Gen D investors has revealed important insights that advisors should consider when developing a strategy to reach this increasingly key segment, particularly its younger members. Wealth management firms seeking to improve the client experience must learn how to optimize the channels and processes available for interacting with each client and allow financial advisors to interact with each other for teaming, knowledge sharing, and other forms of collaboration. Accenture research into the digital investors of Gen D which can be applied to more and more investors as digital usage and behaviors become ubiquitous shows that these investors are no longer satisfied with the traditional investoradvisor relationship. Rather than blindly trusting their financial advisor, these investors seek to validate financial information through multiple sources and channels (see Chart 3). Chart 2. Educate vs. Sell Financial institutions and advisors are just trying to sell me something, not educate me about my choices 6% 18% 17% 37% 22% 5% 19% 3 24% 22% 9% 21% 13% 38% 19% Strongly Disagree Moderately Disagree Neutral Moderately Agree Strongly Agree Chart 3. Consult Multiple Sources I would never take the advice of my financial advisor without first consulting another source, including friends and family 19% 13% 33% 28% Millennials Gen Xers Boomers Millennials Gen Millennials Xers Boomers Gen Xers Boomers 7% 12% 12% 33% 29% 14% 18% 15% 49% 11% 7% Strongly Disagree Moderately Disagree Neutral Moderately Agree Strongly Agree Page 4 Build Lasting Relationships and Brand Loyalty by Delivering Superior Client Experiences

Third: Deliver the Experience Once firms achieve the channel optimization necessary for cost-effectively reaching clients on their own terms, the framework is in place to deliver a superior client experience. The insights into client segmentation and clients wants and needs gained through data analytics can now be leveraged to effectively deliver the tailored content, solutions, and pricing on which the client experience will now be measured and judged. Innovations that empower clients To achieve this new paradigm, wealth management firms will need to build capabilities that help them consistently deliver what their clients want. These innovations will revolve around: Product, service, and treatment catalogs New advice models Self service capabilities Client information delivery Together, these innovations should enable firms to create a Client Experience Hub that empowers their clients. This platform needs to provide clients with easy access to their account information and enable functional transactions across channels. Firms must also confirm their online and mobile technologies are upto-date, provide seamless cross-channel processes, and provide real-time updating of information. Client information delivery is proving to be critical for Gen D clients, who have expressed an increased need to make better and safer choices by personally understanding the risks and benefits inherent in different investment vehicles. To deliver a superior, customized, clientcentric experience to this deeply digital client as well as other clients going forward, advisors and firms should: Personalize collaboration tools and capabilities tailored to each client s needs Offer customized, insightful, and comprehensive advice across multiple channels Offer clients transparency into products and pricing Give advisors the tools and capabilities they need to DELIVER Many advisors feel that they are missing opportunities in this new environment, bogged down by the following factors that can dominate their time and impact their agility: A book of business that is too large and complex to allow agility Regulatory and compliance concerns that restrict their ability to effectively leverage digital tools Inefficient back-office processes and paperwork, much of which is still being handled manually by many firms Client service transactions that require too much advisor time and attention, including supposed self-service functions Financial advisors must have the right technology-enabled tools to help them meet their clients increasing need for a differentiated experience (see Chart 4). The data that are now being gathered through omni-channel digital interactions, including website transactions, mobile apps, and social media, can be overwhelming. Managing the quantity and quality of these data is a critical factor. For many, it is more likely to cause paralysis than to actually provide the ability to more effectively target individual clients. Chart 4. Industry-Leading Technology I expect industry-leading technological capabilities from my financial institution and advisors 2% 6% 2 38% 34% 4% 12% 9% 4 35% 2% 6% 23% 3 39% Millennials Gen Xers Boomers S Strongly Disagree Moderately Disagree Neutral Moderately Agree Strongly Agree Page 5

Accenture research regarding Gen D advisors shows that they use digital channels because their clients already use these tools; thus, they bring real value to the overall client service framework (see Chart 5). Wealth management firms must pay careful attention to providing the tools, training, and flexibility necessary to create the optimal client experience. Advisors, for example, would benefit from tools such as tablet devices that enable them to meet with clients outside the office. Technology that lets advisors seamlessly conduct virtual face-to-face meetings with clients is of interest to both clients and advisors. If firms are unable to facilitate advisor needs in the new omni-channel, digital, and social age, they risk losing top advisors to a firm that can better accommodate them, and clients to other firms that provide a more compelling client experience. Managing the opportunities The new digital omni-channel environment offers advisors more client touch points through increased opportunities for client interaction. The key challenge in managing these new opportunities, however, is in generating not just more interactions, but the right interactions, interactions that enable insight and generate revenue. In too many cases, trying to move clients from one channel to another is not necessarily proving to be productive for wealth management firms more does not always translate into better. In order to retain their top talent, firms must proactively help their advisors become more effective. Gen D advisors, in particular, need the digital tools that will help them communicate with clients through multiple channels. Equally important will be the firm s acknowledgement, approval, and enablement of social media utilization in communicating with Gen D clients. Finally, wealth management firms must optimize processes, allowing advisors to devote more time to client acquisition, education, and retention. Advisors need to be able to move away from the old model of quarterly or annual face-to-face discussions with clients. In the digital age, they must be accessible to clients on their own terms, including the frequency and channels through which clients are most comfortable communicating. In addition to improving internal workflow and automating sales operations, firms need to offer more self-service capabilities for clients, enabling an advice-led model in place of a transaction-based model. Benefits of improving the client experience Successfully delivering a superior client experience helps to obtain higher client satisfaction, leading to increased sales and higher marketing ROI. Efficiencies are further enhanced by improving the cost to serve and cost to acquire, reducing marketing and operating costs to further boost the bottom line. As noted earlier, the drive to regain client trust in the system is slowly being replaced by a focus on increasing loyalty to improve client retention. Financial advisors need to direct their efforts toward consolidating more of their clients assets under management and extending client relationships through product up-sell/cross-sell activities. Improving the client experience should help wealth management firms achieve key metrics of increased revenue and decreased costs. By adopting this three-step approach understanding the client, reaching the client, and delivering a superior experience financial services firms can boost client loyalty and retention, while holding on to their top advisors. To learn more about how wealth managers can prevail in the post-crash world, look for upcoming reports in this series detailing how to attract, engage, and retain new investors and explaining the new role of the advisor in today s digitally driven environment. Page 6 Build Lasting Relationships and Brand Loyalty by Delivering Superior Client Experiences

Chart 5. Digital Tools Why do you use digital tools, including social media, mobile, or web (both advisors who are allowed and not allowed by their firms to use them)? My clients use them 63% 5 0 Using those platforms saves me time 27% I like to use them 61% 45% I can communicate freely on those platforms 9% 9% I see real value in using them 51% 5 0 They help me communicate in a more timely manner 27% My clients prefer to interact with me this way 5 18% I would like to have additional communication channels 45% I feel comfortable using them for client interaction 47% 23% I know what to say to my clients on those channels 14% My clients get better value from me when we use those tools or platforms to communicate or interact 46% 14% They help with succession plans 5% It is easier to interact this way 45% 18% Allowed to use Not allowed to use Page 7

About Notes Accenture 1 Accenture Generation is D, a global Investor management and Advisor consulting, Survey, Accenture technology 2012, services and http://www.accenture.com/gendoutsourcing company, with more Insights. than 246,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com. About Accenture Accenture is a global management consulting, technology services, and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com. Contacts Marc McCollum is the Global lead for Sales & Distribution in Wealth and Asset Management Services. marc.s.mccollum@accenture.com George Korizis is a senior manager in Distribution and Marketing in Financial Services. george.p.korizis@accenture.com Jay Agarwal is the North America Financial Services lead for Accenture Interactive. jayesh.agarwal@accenture.com Copyright 2013 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative. This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.