It’s about you: As big financial services regulatory change and another potential recession draws near social science can give valuable guidance for winning client trust.
There’s change afoot, the UK retail distribution review sees the largest regulatory upheaval any industry has faced in the last 100 years. January 1st 2013 means all financial services market participants must offer fee based services, products must reflect this and the old world of commissions and associated rebating of fees and trail payments are phased out.
The ramifications of this set against a market backdrop of a looming double dip recession means consumer trust in the financial industry is tested no end.
Therefore it’s important for both the industry and clients to engage on these 3 key areas:
1. REALISE INVESTORS ARE FALLIBLE
Where behavioural economics is concerned, we now have firm evidence that humans are fallible beings – particularly where finance is concerned. The view that investors are economically rational in all decisions they make is flawed in its own right, just look at the current financial crises for your evidence.
The industry can build better client relationships by understanding, exploring client cognitive biases and applying the universal principles of influence through focused fact finding.
An essential part of business strategy should be a study of the cause and effect of behaviour. The interconnected word we live in is complex, with many entwined variables where nothing is certain.
2. MARKET ADD VALUE
Recent studies by McKinsey and Accenture have found that it’s the sales experience not the value to price ratio, product and service delivery nor company and brand impact that makes the difference. The industry really has to stick its neck out and bespoke all forms of client interaction to ensure value is added at all times through the 6-step advice process.
Tailoring client welcome letters once business is completed, ensuring client special occasions are diarised and ensuring potential after sales barriers are managed are simple ideas that are so often forgotten.
3. NEXT GENERATION PLANNING
Generation Y and Z are now demanding instantaneous, high quality financial advice. Banks are already wizening to including the younger investors in a ‘co-build’ strategy (focus groups using input from students) for their product development.
Bespoke customer friendly technology, social media, face-to-face engagement and counter-intuitive risk management (gaining customer informed consent) will ensure sustainable businesses and relationships for the future.
Client trust can be engendered and sustained by intelligent application of social science principles in applying context to enable informed choices in relation to their business models, technology, marketing, communication, risk management, and nurturing stakeholder relationship capital.
For more information read Chris’s book “Winning Client Trust, The Retail Distribution Review and the UK financial services industry’s battle for their clients hearts and minds” out now on amazon and kindle. www.winningclienttrust.com twitter #RDRbook
