Published in Financial Services

Managing the Customer Experience through Financial Advisors

Financial Advisors (FAs) are key to the promotion, distribution and support of a wide assortment of insurance, investment and banking products and services. From life insurance, variable annuities, mutual funds and retirement products to trust services, wealth management and an assortment of investment instruments and securities, FAs often are the connection between customers and financial services providers.

The FA channel includes an array of professionals – from traditional insurance agents, broker/dealers, lawyers and accountants to money and wealth managers, financial planners, consultants and investment advisors. They span from certified professionals licensed and regulated at the state or federal level to individuals who simply have hung out a shingle. They can be solo players, employed by an independent agency or Registered Investment Advisor (RIA) or embedded in a wire house, bank brokerage or regional broker/dealer.

Financial Advisors are the “Face” of Customer Experience

Most, if not all, human interactions with firms flows through the FA. This permits the FA to know their clients and their needs to better manage their relationship and interactions, not to mention assure the ongoing relationship and cross-sell. As both a service and sales channel, FAs become the “face” of the company. This is their job: they get the kudos (from both client and firm) when things go well; they catch the flak when there are problems.

Companies want their FAs to have a strong relationship with and deliver great experiences to their customers. But here’s the rub: it turns out that customers often are more attached to their FAs than to the financial services firm. We see this in experience and performance scores that are more highly correlated with the FA’s performance than with the company’s overall ratings. But FAs often jump to competitors and switch allegiances – and their clients often follow them. Or FAs simply retire. Their departure is especially problematic when they are an independent FA or represent multiple firms.

The Customer Ownership and Relationship Scales Tilt in Favor of the FA

FAs typically have a deep sense of ownership with regards to their clients. Non-captive FAs take this ownership to another level and are fiercely protective of their customers, to whom they sell other company’s products.

Financial services providers may claim ownership of the end customer. While the account, policy, security, contract or instrument may carry the name and legal obligations of the financial services company, make no mistake about it: the customer ownership and relationship scales tilt heavily in favor of the FA. A few proof points:

  • The gaps in customer contact and other information in the firm’s customer files and their lack of knowledge about prospects, inquiries and lost sales: this is bread and butter information for any firm managing customer relationships and sales
  • Who customers contact when they have an issue or question. In some instances, customers can’t even identify the underlying carrier or service provider. This is a telling indicator of where customers’ allegiances lie and who customers consider the provider.
  • So-called “orphaned accounts”often languish in limbo until/if another FA establishes a rapport with the customer.

As an intermediary between the underlying financial services provider and the customer, the FA controls much of the customer experience and, to a large extent, owns the customer relationship.

Balancing the Customer Relationship in the Firm-Customer-FA Triangle

Financial firms cannot afford to abdicate relationship and touchpoint responsibilities to FAs. The company needs to focus on delivering a great experience for and building strong relationships with end customers. Financial firms need to make a concerted effort to deliver branded experiences linked to the company. Digital tools can partially mitigate dependence on the FA – but this can backfire, as the client will run to the FA if they have any problems. Keeping multiple people involved in accounts, when possible, also can reduce reliance on the individual FA.

The challenge of this firm-customer-FA triangle notwithstanding, the company does not want to undermine the client-FA bond. Companies need to focus more attention on cultivating their relationship with the FAs, especially when the FA can place a client’s business with another provider. (The likelihood a non-captive FA places a large share of their book of business with a given provider is directly correlated with the strength of the relationship the FA has with that provider.) In effect, companies need to attend to the experience needs and nurture relationships with twosets of customers, both the end client and the FA.

While FAs in general are business partners, non-captive FAs are more like small business owners who want to work with the financial services providers they think will best facilitate the growth and support of their practice. This translates into a keen interest in tools, materials and processes that support the sales and closing process. Inevitably time-stressed, they want firms that are easy to work with as an FA: this means quick (and positive) responses to their inquiries, flexibility in underwriting and other standards and minimizing administrative burdens. When earning commissions or fees, FAs want to not just earn the maximum possible; they also want prompt, accurate payouts and convenient tracking, as well as an easy (not to mention sympathetic) dispute resolution process.

Time for a Voice of Advisor (VoA) Program

While the ultimate customer is the end client, financial services providers need to recognize the FA also as customers and collect, analyze and act on data regarding the FA experience and relationship. This is especially true for non-captive FAs.

Conceptually similar to traditional VoC work, the VoA program should be driven by the firm’s business objectives with the FA community and be customized to the firm’s specific situation and needs. As with other customer experience programs, the FA program should be a structured, systematic effort, with real-time reporting and a closed loop feedback function.

From Financial Advisors to Relationship Managers

Many banks also have salaried Relationship Managers (RMs) directly managing affluent customers. On the business side, RMs are universal in corporate banking, prevalent in the middle market and common in small business.

As employees, RMs are less independent than FAs, but most of the same issues apply, albeit at a lower level of intensity. RMs are very much like traditional sales people. They are concerned with the Service, Support and Business Development tools at their disposal to meet the needs of their designated clients.

Reliance on Financial Advisors and Relationship Managers is a reality for many financial services firms. The successful ones will be those that are the most effective at cultivating and maximizing the relationship with these sales, service and distribution channels and partners, while simultaneously nurturing bonds with the end clients.