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We spend a lot of time, in this industry, talking about how client expectations have changed over the last few years (for obvious reasons).
It's an important conversation but can lead us down the wrong path, because it suggests the change is over and we just need to catch up.
We believe that two things are true.
- To deliver good service, we need to understand how expectations have changed. That's not too difficult to do simply by asking clients about their preferences and expectations.
- But to drive deeper engagement, we need to understand how clients are feeling right now - not their preferences and expectations but their needs, concerns and aspirations. And because we're human, how we feel right now may be different from how we feel next week.
In April, Absolute Engagement conducted an in-depth study of high-net-worth clients with the Investments and Wealth Institute to get inside their heads and understand what they really need.
Simply put, as an industry we should feel good about the experience that has been delivered to date and we should worry about if and how that will change in future.
Some Things Haven't Changed
Overall, the quality of client relationships hasn’t changed. The key metrics suggest client-advisor relationships are consistently strong.
However, we cannot confuse strong historical metrics with a great client experience. High level metrics are important but reflect what has happened in the past, rather than what needs to happen in the future. Further, satisfaction is a direct result of meeting or exceeding expectations on core relationship factors, but it is not a differentiator. We need to aim higher.
Client Preferences Have Changed...
We know, of course, that some things have changed. Client preferences have changed and client needs have changed – and they continue to change.
Fewer clients say they prefer face-to-face to reviews, opting for virtual reviews or a hybrid approach. Almost half of clients, who prefer some virtual element, say that it is because they became used to a new approach during COVID and want to continue. They were 'trained' to want something different.
Client Preferences Have Changed, But Clients Have Also Changed...
While changes in client preferences aren’t surprising, clients also tell us that they are battling a wide range of concerns. Almost half say the last two years have impacted their sense of financial security, control, clarity and confidence.
However, we cannot assume that delivering on changing preferences, by providing virtual reviews, is enough. An increased use of Zoom has not been the most significant change in our lives. Client mindset has changed and human needs and concerns are fluid.
Engaging with clients will mean that advisors need to be more nimble, changing the conversation to reflect what is most important to clients in the moment. And firms will need to support them in doing so. Those are exactly the kinds of problems Absolute Engagement is solving right now.
Clients Have Changed, but Not All Clients Have Changed in the Same Way...
Preferences, needs and expectations are significantly influenced by the age and stage of the client. Some of the changes we are seeing are the result of the global health crisis, but many are the result of demographics. While those changes may look the same (e.g., a shift to virtual) the demographic influence means these changes are not temporary.
Clients who are under the age of 45 have different preferences. This is no surprise, but worth noting as these clients will be your best clients in the near future.
However, the ‘juggle generation’ (between the ages of 45-54) are struggling and that has an impact on how they view their advisory relationship.
Almost two thirds of clients say they have been impacted negatively as a result of the last two years, but few in exactly the same way. These changes will influence the support that advisors need to provide to ensure the advice they are providing is ‘heard ’.
The Implications
While it is comforting to know that key client metrics are strong and relatively unchanged, it is clear that things are changing.
- We believe that advisors will need to evolve the client experience to reflect the changing preferences of clients. Those preferences have changed but are likely to be relatively static in the period ahead.
- We believe that the most progressive advisors will go one step further to deliver a client experience that actively reflects the changing needs, concerns and challenges of clients. Those needs, concerns and challenges are fluid suggesting a more dynamic client experience will be needed in future.