In this post, we set out the reasons why client-first practices ultimately win and provide some ideas about how to become a client-first practice.
The industry is undoubtedly at its most important crossroad ever. It has the choice of continuing to pursue product-led business strategies and risk ever-increasing levels of mistrust and lack of confidence, resulting in a much diminished and smaller footprint to meet the rising need for financial advice. Or practices can embrace a client-first mindset and culture.
Practices that want to survive and prosper don’t have much choice really. That’s because the forces of change blowing across the industry, including consumer preferences, technology, and new compliance obligations imposed by FASEA and arising from the Royal Commission, make it impossible to resist. Each of these forces demands a client-first response.
But what does client-first mean? It simply means putting the client first ahead of anything and everything else.
Practices that do this strive to build healthy relationships with their clients by identifying their needs and providing the best possible experience to them. They pay special attention to and place their emphasis on putting the client’s priorities ahead of anything else, and end up providing a personalised client experience.
This makes total sense when you consider the obligations now in force courtesy of FASEA’s Code of Ethics. Standards 2 – 10 are clearly designed to ensure advisers conduct themselves in a client-first manner at all times. Although some further guidance is required around the interpretation of standards 3 and 7 in particular, there can be no misunderstanding the intent. Client-first.
Practices that put the client first are commonly referred to as client-oriented, client-driven or client-focused businesses. They are clearly oriented towards serving the client’s needs, and regularly measure client experience levels in order to determine the success of their practice. It isn’t really a strategy, it’s a culture.
The point about culture is really important. Ultimately, the Code of Ethics will drive cultural change in the industry. But if you are simply implementing changes because they are mandated by the code and you are doing so to tick a compliance box, the intent is misdirected and it will take much longer to ensure your practice is client-driven.
Why client-first practices win
The most attractive rewards for being client-centric lie in improved personal and commercial outcomes – a happy and committed team, the ability to attract talent, natural growth in revenue, client numbers, profitability, client loyalty, and, importantly, practice value. There are no doubt other rewards as well, depending on your circumstances. Let’s briefly look at each of these.
No one wants to work in a practice that is focused on putting its own interests first and floundering to satisfy and retain clients. Team members observe what is happening around them and make critical judgements about their future employment intentions based on the practice culture, which should be driven by an overarching desire to put clients first.
Ability to attract talent
Practices that consistently demonstrate putting their clients first are more likely to attract the sort of talent they require to maintain that culture and grow the business, particularly during a period when fewer people are entering the industry.
Growth in revenue
Due to better client retention, driven by higher satisfaction levels, clients are less likely to be price-sensitive, will be open to expanding their engagement with additional services/products, and more likely to refer new clients and engage in positive word-of-mouth.
Growth in client numbers
Unless the practice has a deliberate policy to limit client inflows, client-first practices naturally attract more clients through word-of-mouth, referrals and other forms of social proof that are fuelled by authentic client feedback about the practice’s performance.
Growth in profitability
Both growth in revenue and reduced costs naturally generate improved profitability. Cost reductions are achieved by client-centric practices through reduced client acquisition costs, fewer complaints, client created marketing content through testimonials and social media posts, and the less intense service requirements of happy, loyal clients.
Fewer instances of negative engagement with clients, more services that delight and a better brand reputation pay big dividends through improved client lifetime value which, in turn, positively impacts practice valuation.
Increased client loyalty
Practices that put their clients first are highly likely to engender client loyalty and that means increased revenue, profitability, lifetime value and referrals of new clients.
Increased practice value
Practice values are now heavily influenced by client quality and longevity and the likelihood of value creation. The present value of future cash flows from each client (lifetime value) is becoming super important. Practices that are client-centric win at the expense of those who focus on their own interests.
Lifting your client-first game
Here are a few thought starters to help you lift your client-first game.
Don’t treat the Code of Ethics just as an exercise in compliance
While compliance with code is mandatory, its underlying purpose is to elicit behaviours which individually and collectively will change the way the industry operates and the extent to which consumers will have trust and confidence in the profession. By demonstrating, realising and promoting the values of the code, your practice is likely to become a client-first practice.
Build relationships with your clients and enable feedback loops
Satisfaction is not enough to drive long-term client loyalty. Offering a service that is executed well is only the first step. Regularly collect and listen to feedback from your clients using a service like MyNextAdvice, and do your best to acknowledge issues and address them. Embracing negative feedback from an unhappy client can pave the way to a better experience for everyone. Practices can use insight from client complaints and feedback to anticipate needs and then overdeliver.
Empower the team to act
Client-first practices are often characterised by the team’s ownership of the client experience. It is not just the job of a single person to ensure the best possible client experience, but the responsibility of the whole team. Such responsibility has to be woven into the practice’s processes, policies, and culture.
A client-first practice aligns its best interests with the best interests of its clients.
Hopefully, this article has helped you understand why client-first practices will succeed and provided some ideas to help you on the journey to becoming truly client-centric.