Let’s be blunt. Broker/dealers aren’t the darlings of the wealth management industry they once were, having struggled to adapt to external forces and the onset of discount brokerages that have made investing accessible for millions.
Service has suffered, and investors have taken note. In the latest J.D. Power survey of 4,396 investors in late 2021, 86% of clients aren’t receiving a comprehensive level of service based on criteria including a documented financial plan, recommendations in a client’s best interest, understanding of their goals and frequent communication.
Full-service b/ds have neglected service in favor of technology investments and growth, especially inorganic growth, for more than two decades. They have overstretched themselves in their competition for customers. Avantax has been around since 1983 and has experienced this seismic industry shift firsthand.
The key lesson we have learned, especially over the past three years as we have integrated our core businesses, is that leading with service drives growth and scale. In the interest of growing together and building a better financial services industry, I’d like to share some of our learnings from the past several years.
Lead With Empathy
When I think about service excellence, I define it as delivering excellent care during every interaction with a financial professional, an individual or a family. By asking financial professionals about their experience and contrasting that with feedback from clients, firms can achieve higher standards of service. The experiences of these groups are often quite different, and our assumptions are rarely accurate.
For example, many firms and financial professionals do a great job being empathetic during prospecting and onboarding, but quickly fall into a rote transactional mindset of quarterly reviews and investment performance reports. Organizations must stay open to feedback and to change, two elements essential to business survival in ultra-competitive markets like financial services.
You Don’t Know What You Don’t Know, but a Consultant Might
Our industry is highly complex, even if you are a subject matter expert who has been operating in finance for 25 years. It would be impossible to maintain current knowledge of everything happening in the tax and finance spaces, while also running a business effectively with a perfect service model. Because of this, another way to achieve service excellence firms might consider is to outsource support and hire a consultant. By using a dedicated resource like a consultant, a firm can give more hours back to their team and allow a third party to focus their full time and energy on the problem at hand using their nuanced external expertise.
Fixing service-level problems is not a part-time job, especially for large firms with complicated infrastructures. It’s a full-time job and requires the full attention of at least one person, as most players will be able to lend only partial attention and participation. Revolutionizing your approach to service is not a project that can be squeezed into one quarter or even one year, and an external consultant can be incredibly valuable to larger firms with long business histories that require more robust planning.
You Need Qualitative and Quantitative Data
To make a plan that will improve service excellence organizationwide, you need data based on people’s actual experiences, and historical qualitative data. The numbers will not give you the full picture, and neither will any one person or group. At Avantax, when it came to quantitative data we started with questions like: “Where is the data, how fresh is it and how well is it organized?” To gather the qualitative data we needed, we talked to financial professionals who came from wirehouses, from our competitors and those who have been with Avantax for more than 40 years. At our Dallas headquarters, we sat down with our most vocal critics and asked them what we could do to improve our service. By using a combination of data based on trends and information we gathered in interviews with key individuals across the firm, we were able to better understand the gaps and pain points we needed to solve for specifically to drive better service, and subsequently growth.
Another major focus area should be on alignment from top to bottom at the firm, getting buy-in for a service-led approach from the most senior person at the organization to the least. This is essential when so many financial services organizations, whether due to longevity or due to merger and acquisition (M&A) activity, have unfortunately ended up with a disconnect between the “new guard” and the “old guard.” This is also another instance where an external consultant can provide great value through objectivity, and their perception as a neutral third-party. They can help negotiate consensus between disparate internal opinions and personalities, while leaving all existing relationships at the firm fully intact.
The bottom line is if you have excellent service, you can drive growth and scale. Even if initial benchmarks are met, you must foster a transparent culture and solicit actionable feedback constantly; this cannot be overstated for large B/Ds. There’s always room to improve and to serve outliers who aren’t getting the highest level of care. While there might not be a clear finish line for your teams to see, you can consistently communicate that this is now a culture committed to continuous improvement for the benefit of everyone: financial professionals, end clients and employees.
Dan Kocher is vice president of service excellence for Avantax Wealth Management.