What wealth management firms can learn from Forrester’s 2013 Customer Advocacy Report

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July 29, 2013

This post is a continuation of our summary and commentary on Forrester Research’s report Customer Advocacy 2013: How Customers Rate US Banks, Insurers, Investment Firms, And Credit Card Issuers and will focus on what wealth management firms can learn from the report’s findings.


Most wealth management firms are just below average

The majority of wealth management firms sit in the middle of the financial services industry in terms of their customer advocacy rating. The largest direct brokerages and full-service wealth management firms are clustered between 42% and 48% of customers thinking they put their customer’s needs before the firm’s bottom line.

Those that do have high customer advocacy scores (more than 50% of customers believing they put their customer’s needs before profits) centre their marketing material around putting the customer first. Forrester notes that “Vanguard promises to “Put your interests first at all times and invest the majority of our personal assets alongside yours”.


Steps to improving your customer advocacy score

1) Commit to change
Start by accepting that there is a problem. Forrester’s data proves that most wealth management firms are not considered customer advocates by their clients. Unless you’re already focusing on putting customers first, it’s unlikely that yours is different. If you are not sure, consider your firm’s decision making methods. Are they customer-based or profit based?

Bring it up with your executive, and arm yourself with Forrester’s report. You could also survey your customers yourself. The goal is to get your organization to commit to change.
2) Look for high value investment opportunities to improve customer experience
Putting the customer first comes from orchestrating a truly amazing customer experience. An effective option is to build both a single customer view database and a product recommendation engine. Together these two technologies give your employees cross-sell and up-sell suggestions based on customer data for use across product lines. Build rules that prioritize the customer’s needs over profitability or revenue.

Another good opportunity is to invest in mobile customer engagement technology. One example from our business is building a mobile insurance application. We recommend our clients prioritize mobile, because it’s what customers want. Making the investment shows you are listening to your customers, even if it makes your CIO a little bit nervous. The bonus is that in almost every case a more engaging application results in higher profits. For example, Questrade doubled the number of applications they could process while halving their salary expense.
3) Listen to your customers
Setup channels for your customers to provide feedback quickly and easily. A simple mobile form from a link within your app or on your website works well. Use a simple URL and advertise it.

Then, act on the feedback you get. It’s hard work listening to customers because it usually involves making tough changes, but it’s worth it. You will be rewarded with loyal customers and higher revenue.

Most wealth management firms sit around the middle of the pack in financial services with respect to customer advocacy scores. Those that outperform their peers can become one of the respected few who put their customers first. Those that do, will increase revenues and profits.

For our summary of Forrester’s Customer Advocacy 2013 report, see last week’s blog post.