The wealth management industry faces unique and significant challenges as it responds to a tsunami of regulatory change, including the Code of Ethics, which is legislated to commence from 1 January 2020 (less than 3 months away). A core issue the industry needs to address in the short term is acknowledging the importance of and taking steps to understand and address client experience.
Simply put, client (or customer) experience, also known as CX, represents your clients’ perception of their experience engaging with you and your brand. It results from every interaction they have with your business – from the discovery phase where they may be checking your web site and/or social media profile, the initial advice and onboarding phase, through to ongoing engagement.
Literally everything you do that directly or indirectly involves your clients impacts their views about them becoming and remaining a client. The better the experience your clients have, the more likely they are to remain a client, buy more services from you, refer new clients your way and avoid lodging complaints. Delivering a great client experience has a direct and material impact on each client’s lifetime value.
What has CX to do with the Code of Ethics?
When FASEA released the Code late last year, it marked a critical step in demonstrating a strong resolve to ‘professionalise’ the industry, with a view to reducing the propensity for misconduct and rewarding those who conduct themselves in an ethical manner with a social license to practice their trade.
Unsurprisingly, the standards and values prescribed by the Code are intimately linked to your clients’ perception of their experience engaging with you, because the Code impacts every facet of your professional conduct.
In order to comply with the Code, every relevant provider (adviser/planner) must always act to demonstrate, realise and promote the values of trustworthiness, competence, honesty, fairness and diligence. These, in turn, are informed by the prescribed 12 standards.
It’s logical that, if you comply with the Code when you engage with each of your clients, they should perceive that you have delivered a good client experience. What client doesn’t want trustworthiness, competence, honesty, fairness and diligence?
But you have to be able to demonstrate and realise those values. How can you do that?
For starters, you can continue to undertake internal processes designed to ensure you are acting in a compliant manner. For example, file reviews, audits, use of AI/ML driven software that monitors advice in real-time, etc.
While processes like these remain essential in a Code of Ethics world, we take the view that client feedback should also be compulsory in order to capture an ‘outside in’ perspective. After all, the overwhelming majority of compliance measures introduced to the wealth management industry (including the Code) have the goal of ensuring better customer outcomes.
It would easy for the industry to view the Code as yet another ‘tick a box’ compliance requirement, but to do so misses the critical point that the absence of the voice of the client will lead to an incomplete picture of adviser performance and makes it very hard for advisers to demonstrate, realise and promote the values.
Not only does the voice of each client contribute valuable data to demonstrate compliance with the Code, it can also be used to understand client experience to improve performance and grow your business.
Dr Ray McHale is the CEO and Co-founder of MyNextAdvice, a software and consulting service that facilitates continuous improvement for advice businesses, using customer data targeting growth and compliance.