Some advice practices already understand why client feedback is a gift, but many are yet to embrace it as a core element of their business. Let me explain.
There are some clear signs that both the government and regulators have started to recognise the presence of industry over-regulation and its impact on advisers and their ability to economically deliver advice to the Australian community. For example, the government recently announced that FASEA will disappear and its functions allocated to the Treasury and ASIC. This isn’t an acknowledgment, though, that industry can self-regulate adviser conduct to ensure better outcomes for consumers.
The poor behaviours unearthed by the Royal Commission remain fresh in everyone’s minds and have, regrettably, been used to tar an entire industry. This has created a situation where measuring the success of the industry means focusing on the behaviours of the lowest common denominator – those advisers who do the wrong thing. While everyone awaits further clarity around the role of the mooted Single Disciplinary Body and hopes it will be able to quickly identify and remove poor advisers, the industry could do more to ‘right’ the broader community’s loss of confidence and trust.
Ultimately, aggregate industry success and its positive contribution to the wider community can only be built one client relationship at a time – the individual assessment of client outcomes and their experience of working with their adviser. Their sentiment and willingness to remain a client and refer new clients are key questions that need to be answered, together with the underlying drivers of those outcomes, including compliance obligations such as the values underpinning the Code of Ethics. No amount of regulation will change that.
“Industry success can only be built one client relationship at a time”
A key challenge for the industry is that it hasn’t put itself in a position to marshal and communicate data that authentically represents the aggregate performance of all advisers, extracted from the voices of individual clients. Imagine how powerful it would be to measure a combination of client experience and compliance obligations at the industry level to help inform and influence the media, community, regulators, and government.
The fundamental importance of building and maintaining strong client relationships is beyond question. Advisers who build relationships with their clients for the long haul can expect to achieve much faster and more sustainable growth and make a significant contribution to restoring community trust and confidence. Many advisers will say they already do that and it’s probably true, but where’s the hard evidence to prove the point?
Like measuring the performance of client investments over time to calculate wealth accretion or destruction, so too can client relationships and adviser performance be measured.
Gathering and using feedback from clients has always been a smart move but it has become more critical for each adviser to at least think about the role of client feedback given their legal obligations under the Code of Ethics to demonstrate, realise and promote the values. Not just any feedback, but the type that helps drive targeted performance improvements and more confident decision-making.
Given the tumult that the industry experienced in 2020, 2021 is the best of times to be building great brands and generating actionable insights, client by client, using authentic feedback to simultaneously assess compliance performance, accelerate growth and enable better client experiences. A word of caution though. Collecting feedback that is primarily focused on measuring superficial, surface-level metrics such as NPS (Net Promoter Score), or to create favourable reviews from selected clients to generate new leads, simply won’t get the job done.
Not sure why client feedback is your best friend and will help better position the industry to the wider community? Here are ten (10) commercial benefits that you should consider.
Clients feel listened to and valued. The simple act of asking for feedback ensures your clients’ opinions and feelings are acknowledged as being important to the future of your business. Clients will feel like their opinions count, that you care for them and are genuinely concerned about whether they’re happy with the process of using your services and the outcome you have been engaged to achieve for them. The act of collecting feedback through a survey can have a profound positive impact on client engagement and the quality of the relationship.
Clients provide affirmative quotes, narratives and stories. Satisfied clients are more likely to provide content that can be used to promote your business and these are a good source of testimonials and case studies that you can use in your future marketing activities. Remember, prospects will invariably look for tangible and credible evidence (social proof) to validate their decision to become a client.
Clients are reminded of their experience. Responding to a survey reminds the client of their experience and, assuming it was one they were happy with, referrals are more likely to occur and continue into the future.
Advisers receive ongoing and timely reminders. Through the regular collection and dissemination of client feedback, advisers are reminded that their diligence and client focus is paramount to ensuring a sustainable business. Advisers now have a legal obligation to be able to demonstrate their compliance with the Code of Ethics, particularly the underlying values.
Make better decisions. As businesses grow, senior managers may become isolated from what is happening on the front line. A well-implemented and ongoing client feedback process provides the information needed to make better decisions around a wide range of business issues.
Address pain points. Receiving regular client feedback enables the business to correct any issues or concerns clients may have. When provided with feedback, you will be able to save money, time and improve relationships for the benefit of the client and the business. Feedback allows you to address issues as they arise as part of a continuous improvement loop.
Stay on the same page. Not being in tune with your clients is like living in a parallel universe. The way you think your clients feel about you and your brand is not always the same as what your clients really feel, no matter how often you may talk with them. Using a third-party service often elicits more authentic feedback.
Minimise reputational damage. A dissatisfied client may tell many other people about their bad experience – social media is a very powerful megaphone – which could harm your personal or brand reputation and have an effect on lifetime value, market share, profits, and business valuation. Being able to nip problems in the bud through the collection of timely feedback will help you protect your reputation.
Maximise win-back opportunities. Some clients will not tell you they are unhappy with your service; they will simply stop doing business with you. This can easily be avoided if you seek out their feedback soon after a significant interaction such as an annual review meeting. Client win-back processes are an important step to maintaining your growth trajectory.
Generate loyalty and referrals. When you receive client feedback, it allows you to better understand your clients’ needs and concerns. This information can help you go above and beyond the call of duty and exceed client expectations to develop loyalty and generate referrals.
Just as important in the current environment, there are also several benefits to be derived from client feedback from a compliance perspective.
A range of compliance measures have already or are being introduced by the government as a result of the establishment of FASEA and the recommendations arising from the Hayne Royal Commission. These have and will place additional obligations on licensees and their representatives and impose tough penalties for non-compliance.
As these measures are all focused on ensuring better consumer outcomes and restoring trust and confidence in the financial services industry, it makes a great deal of sense to ask clients about their experience of working with their adviser and to utilise their responses to demonstrate the extent of compliance with their new obligations.
When you think about it, responses collected from clients concerning the compliance obligations of advisers could also help mount stronger defences against future claims.
As described above, advisers must demonstrate, realise, and promote the values of trustworthiness, honesty, competency, fairness, and diligence when undertaking their daily professional duties. Licensees are responsible for monitoring the conduct of individual advisers operating as representatives, however, a new Single Disciplinary Body (SDB) is expected to be legislated by mid-2021 and operational later in the year. It’s important that advisers are able to produce evidence of their compliance dating back to the implementation date of 1 January 2020.
As the obligations are principle-based standards of conduct, licensees need to establish suitable mechanisms so they can monitor adviser conduct and collect authentic data that either directly or, in combination with other evidence, demonstrates compliance.
When combined with internal compliance mechanisms such as record keeping, documentation and file reviews, externally sourced data collected directly from clients in the form of feedback, will position licensees in a strong position, if called upon by regulators and government, to demonstrate compliance.
In another sense, the Code of Ethics represents a very positive development for the industry as advisers can position their services in a manner that should promote greater trust and confidence. This is an opportunity to develop an extremely compelling offering, particularly if advisers are able to leverage client feedback to validate their performance.
Ongoing Fee Arrangements.
The following arrangements will soon need to be put in place:
- Fee recipients are required to seek renewal of ongoing fee arrangements by clients annually.
- Fee disclosure statements must include information on the fees to be charged and services to be provided in the coming year, as well as information about the previous year.
- Written consent must be obtained prior to fees being deducted under an ongoing fee arrangement and consent generally cannot be obtained for a period of more than 12 months. Fee recipients must obtain written consent to continue an ongoing fee arrangement annually.
This is a very significant change because the pricing of advice will effectively be determined on value from the client’s perspective, every year. Being able to demonstrate value for money to every client, every year will be essential and we have written about it here. Client feedback will be a critical element to help you to manage this process.
A sensible approach would be for licensees to consider the use of client feedback as a data collection mechanism to help monitor performance and take action as required. This doesn’t require different forms of feedback for different purposes and at different times, but could be incorporated in a single feedback service such as MyNextAdvice, which is continually evolving to support industry requirements.
In summary, client feedback is and will continue to be your best friend if you are committed to building a high growth and compliant business. Feedback is a gift. It will also help the industry achieve increased trust and confidence from the wider community, regulators, and government.
Please reach out if you are interested to learn how we can help you achieve both of these outcomes.
MyNextAdvice empowers advice businesses to measure and act on their clients’ experience to drive growth, efficiency, and compliance. Our cloud-based service makes it easier to collect, understand and act on client feedback, enables leaders to monitor performance, make better decisions, achieve impact, and give their businesses a competitive edge. We also provide consulting services focused on improving client relationships to boost commercial performance – Engagement Strategy, Segmentation, Customer Experience.