The folly of acting only when a client complains
‘PwC has correctly highlighted the key strategic risk of not obtaining client feedback’ Sebastian Dovey, Scorpio
For an industry that talks a big game about being a relationship business, it seems that few wealth management institutions do much about fostering a deep understanding of their clients. Wealth management firms often fail to engage with their financial needs and objectives, but worse still, many question if they are considered relevant to their wealth management provider. For most, their customer experience revolves singularly around product exposure, when what they seek is service.
PricewaterhouseCoopers’ (PwC) latest report, Competing for Clients, highlights the extent to which wealth management institutions fail to engage clients when developing business strategies and products, recruiting staff, or positioning services.
No satisfaction
Based on 100 responses from the industry, the most startling finding is that more than 90 per cent of wealth managers measure client satisfaction by monitoring the number of customer complaints. Indeed, only 38 per cent undertook any form of direct client surveying and even fewer used independent companies to undertake this surveying. PwC has correctly highlighted the key strategic risk of not obtaining customer feedback: it opens the door to those among the competition that do want to talk and act on customer feedback.
Worse still, where businesses rely on complaints as their test for customer satisfaction, there is surely a higher probability that dissatisfaction may spill over into litigation. Certainly, there have been several cases in recent years where HNW clients have prosecuted cases centred ultimately around lack of care, when that has been manifested in failing portfolios or mis-sold securities.
Unhappy HNW clients are almost certainly more likely to follow up such a complaint with an expensive law suit than those who have a functioning relationship with the provider. Managing a business via complaints is not only a high-risk management strategy, it is also potentially costly in cash and reputation terms.
Talking to clients
It is vital to talk to clients and base strategy, in part, around their responses and not always relying on relationship managers for their feedback. Using experienced third-party interviewers changes the context of a discussion from a negotiation to a frank exchange of views. However, such interviews must reflect the clients level of sophistication. This approach achieves more than feedback on the relationship itself, but also input on strategic issues.
Remember that any bank that interviews clients must manage their expectations on delivery – a process that also relies on the skill of the third-party agency. Otherwise how can a firm honestly claim to be customer-focused? If they do not deliver, they are failing on a service promise before they even begin to build the truly customer-centred approach.
Surely, it is common sense that the focus of a relationship business should be on satisfaction rather than dissatisfaction?
Every firm that does not actively engage its clients faces the challenge of a greater sense of client dissatisfaction and a larger gap between client expectations and the bank’s ability to meet them. Little wonder that most respected client surveys in the public domain find frequently that a private banker takes last place when clients are asked: “Who is your trusted financial adviser?”
Sebastian Dovey is managing partner at wealth management strategy think-tank Scorpio Partnership
‘PwC has correctly highlighted the key strategic risk of not obtaining client feedback’ Sebastian Dovey, Scorpio
