Do annual Goals Based Reviews need a facelift?

Money Management
September 5, 2021 AEST

There is no doubt that 2020/2021 financial year tested all of us in many ways. Financial advisers and their clients are still navigating the impact. Amidst a sea of change, the quality of the adviser/client bond continues to define the strength of the relationship.

However, given there has been so much change, client loyalty may have been affected and advisers should therefore consider giving their annual goals-based review service a meaningful facelift.

The year that was

During this last financial year, financial advisers were hit from all sides: additional compliance requirements from the regulator, adviser educational qualifications, the Financial Adviser Standard and Ethics Authority (FASEA) code of ethics, changes to ongoing fee arrangements, increased operational costs from licensee and levy increases, additional compliance requirements from dealer groups, changes to commission remuneration and adapting to new fee structures, all while involved in an ongoing search for better client engagement and operational efficiency systems, implementing software and processes into businesses and working out how to deliver an advice value proposition in a digital world.

It is little wonder then, that advisers have had next to no time to rethink their service proposition or improve their client experience. Many of the above pressures have kept advisers away from their core proposition – servicing their clients and helping those who need financial advice. One could say that they have spent the past 15 months ‘putting out fires’. Now is the time to ‘build fire breaks’ and ‘back burn’ – in other words: work on the business and be more strategic.

Changing client loyalty

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended the law be amended to ensure that ongoing financial services be renewed by clients annually.

In 2020 research by the Investments and Wealth Institute (USA) revealed that clients are starting to question whether their adviser is providing the kind of service and advice they need. A gender bias study, ‘Creating a better financial future for women’ conducted by Bank of America Merrill Lynch in August 2020, concluded that 35% of women and 30% of men who have bad experiences with a financial adviser, will fire them.

While an adviser’s service activities may seem intuitive, the Royal Commission and client loyalty research shows that not all financial advisers do them well. This goes to show that the success of a financial adviser is heavily dependent on their client’s level of satisfaction and is even more reason for financial advisers to respond to these forces by re-evaluating and repurposing their annual goals-based review, their service proposition, their fees and how they charge their clients.

The importance of the review

The annual review is an opportunity to strengthen and expand client relationships. It can help develop client loyalty and has the potential to differentiate financial advisers from their peers. Advisers who continually enhance the annual goals-based review meeting agenda go beyond just investment performance, insurance policies and market outlook (these reports can be provided to client before the review), freeing up time to focus on the more valuable aspects like goal progress, attainment and adjustments. They use the meeting to assess unmet needs and identify areas of dissatisfaction. These activities build client satisfaction and increase loyalty and trust.

However, advisers need to go deeper in their client meetings and prepare for the unexpected. A well-known saying that our lawyer colleagues use when preparing for court is ‘never ask a question you don’t know the answer to’. The same holds true for the financial advice client review meeting, in that you want to be able to provide an answer for any question the client may have regarding their financial plan. AdviceTech tools that allow a client to update and submit information prior to the meeting provide advisers with the opportunity to review that information and prepare for the meeting, reducing the chances of being blindsided by the client.

In the review meeting itself, advisers can then use their AdviceTech tools to illustrate the benefits of their recommendations. They can show the value they have already added to the client and how much more value they can add over the coming years.

For the client, the goals-based annual review provides a focus on the future to the next big event in their lives. This may sometimes prove exciting and sometimes daunting.

The adviser can create confidence and clarity about how the future may look for each client and with that a roadmap for navigating the next steps in the client’s life, keeping in mind their goals.

Clients want to know: “Am I on track?” What they are asking is:

  • Are we going to reach our goals?
  • Do we have enough in super/going into super?
  • Will our super last?
  • Have we saved enough money?
  • Are we investing enough?
  • If something happens to me will my family be OK?
  • Can we reach all our goals with our current financial plan?
  • How do we get back on track?

Answering these questions requires a thorough understanding of the client’s goals and solid, efficient preparation prior to the review.

The Review Meeting structure

In the meeting itself, using a conversational structure will help create a positive and meaningful experience and outcome for the client. The way to do this is to create and implement a structure, such as:

  • Begin the meeting with a framing comment;
  • Set the agenda;
  • Discuss the information that the client provided prior to the meeting;
  • Ask some questions;
  • Explore the answers;
  • Review performance to date;
  • Show the client which goals have been attained, which goals are on track, and which goals need adjustments to get them back on track;
  • Agree to next steps; and
  • Review the ongoing service arrangement.

Improving the Client Review Journey

In order to improve the client review journey, advisers need to ask their existing clients about the services they want and value. In this way they include their clients in the development of the value proposition. Considering how existing clients want to engage with the business helps determine how the approach may need to change for new ongoing service clients. How clients experience the adviser’s value proposition will help advisers create new, more valuable service packages. How advisers optimise client engagement technology to enrich their ongoing service leading to the review meeting will therefore be critical going forward.

A Fidelity financial planning study in the US, ‘Three Principles of Holistic Wealth Planning’, found that life change planning, values-based planning and total wellness would become the main drivers of adviser success into the future. They propose that advisers should advance their roles and existing business models beyond just financial planning to engage a broader and deeper client engagement and consider factors across a client’s life.

Improving the client review journey requires actively supporting clients and providing significant value based on their unique needs.

Benefits of improving the Client Reviews

A valuable review process with an improved client experience journey holds several practice management and business benefits for advice businesses. To this end, Salesforce’s second annual ‘State of Sales’ report showed that customer experience had overtaken process as the top KPI for the measurement of success in business and Russell Investments now includes customised client experience and planning in their ‘Value of an Adviser’ formula.

According to PwC in the US, even if people love your company or product, 32% of all customers would stop doing business with a brand they loved after one bad experience and 59% will walk away after several bad experiences. If advisers get their client experience wrong then one in three clients (32%) could walk away from their business after just one bad experience! The payoff for valued client experience is tangible. Not only are clients more sticky but are also more likely to endorse the services they receive from an adviser.

A goal-based review facelift will create a compelling marketing message for advisers that differentiates them from their peers, robo-type advisers and digital advice dispensed by superannuation call centres, while also driving referrals from existing clients.

Investing time and resources into an enhanced service proposition can also provide leverage for increasing the value of the business. Finding smart AdviceTech that helps lower expenses, improve personalisation, enhance client loyalty and act as a growth engine all head up the list for increasing multiples on earnings before interest and taxes (EBIT) which is now, more than ever, the primary driver of advice business valuation.
Book the facelift review into your diary

Consider expanding your existing role and explore the benefits of behavioural finance to your clients.

Repurpose your annual goals-based review process so that it goes beyond traditional financial planning and investment feedback. Although most advisers’ efforts have gone into responding to the new regulations, ensuring they are compliant, upgrading professional qualifications, coping with the large increase in financial requirements imposed on them, it is now time to regain customer trust and loyalty.

While the steps involved in giving your services a facelift are simple, making the time to focus on the strategic is not easy. The secret of success lies in employing the right AdviceTech that facilitates better client engagement, and if you need someone to keep you accountable, finding the right business coach. Do the strategic work now and you may be surprised by how much time it will free up, how many fires you put out and how much better your business will be in the future.

Johann Maree is a practice development manager with AstuteWheel.

Originally published in Money Management. September 3, 2021