Clients Do Not Want Help. Until They Do.

(This was originally published as a guest post for my friends at the management consulting and strategic communications firm Beyond the Arc: Understanding how customers really want help.)

On the same day I published a post on the Clientific blog about the sometimes disappointing allure of technology (Technology is Not a Silver Bullet), the always insightful Discerning Technologist Brad Leimer shared a a post from The Financial Brand on LinkedIn (Big Study Examines Retail Channel Preferences).

The study, sponsored by Cisco, showed strong consumer preferences for non-branch channels such as web, mobile, phone and ATM for many types of interactions. However, branches were the preferred channel for such things as “Apply for a loan” and “Support from banking representative”. (See below)

What explains the stark differences? First of all, as Ron Shevlin of Snarketing 2.0 says,  just because a person visits a branch for help or to complete a transaction doesn’t necessarily mean that they prefer to do it that way. It may mean that the web site or phone representative was inadequate to meet the client’s needs.

Secondly, and not to get all snarkety myself (that’s Ron’s sole province), but clients really don’t want your help. Until they do.

Results Not Process

Much has been written about the so-called “customer experience”– everything that a customer comes in contact with during their lifetime interaction with your brand; direct and indirect, obvious and subtle, conscious and unconscious.

Successful firms correctly attempt to measure the expressed and latent needs of clients. The best keep in mind the words of the great ad man David Ogilvy, who has been variously quoted as saying multiple versions of “People don’t want quarter-inch drill bits, they want quarter-inch holes.”

I have long found inspiration in the work of now-retired Harvard Business School professor David H. Maister, and I have been using some variation of his 2×2 matrix below for at least a decade.

Maister uses a healthcare analogy to describe the key operational and profitability metrics of different departments, and I have found it useful to help financial firms think through their various activities and how they provide value to their clients.

Pharmacy (Low Touch/Standardized Process)

For a financial firm, these are the things that just need to get done quickly and accurately. For the most part clients have little preference as to how.

–

• Account Opening

• Transactions

• Balance Reporting

• Transfers

• Basic Service Issues

–

Nursing (High Touch/Standardized Process)

These are items that might need a little more hand-holding, even though the processes and protocols are still well defined, and good client-service skills can go a long way to improving client satisfaction.

–

• Standard Credit

• Product Advice

• Estate Settlement

• Discretionary  Trust

• Complex Issues

–

Brain Surgery (Low Touch/Specialized Process)

These activities require specialized skills, but the real value comes from applying the expertise, not necessarily from the advisor/client relationship.

—

• Custom Credit

• Asset Allocation

• Basic Trust Admin

• Complex Assets

• Basic Estate Plans

–

Psychotherapy (High Touch/Specialized Process)

For financial firms (and especially wealth management firms), this is the top of the value chain. It’s what happens here that drives most loyalty/at-risk measures. Diagnosis is key, and it is from here where brain surgery may be prescribed.

–

• Goal Setting

• Financial Planning

• Complex Estates

• Succession Matters

• Nonfinancial Issues

• Moral Support

–

Bringing it All Together

Clients may well be willing to use your new app for certain things, utilize your web site to download transactions and contact your call center to change their address. Those things may improve your operating margins– as long as they work.

The face-to-face interactions that do the most to improve the client experience are not the ones that solve the issues that could have been (and should have been) solved via other channels. It’s the ones where they are really receiving the time and attention from someone who understands their situation and their goals and is helping them get to where they want to be.

Clients don’t want your help. Until they do.

Secrets of Successful Wealth Managers

Firms that succeed with affluent clients over an extended period of time do a number of things well. Through the work of my consulting firm Clientific we have distilled the twelve core principals that successful wealth managers follow.

The 12 C’s work like building blocks, from the bottom up. Begin with the first four, components of a strong strategy. Once those are set, work on the next four, the key elements of executing that strategy. Finally, the final four are the things that differentiate top firms from their competitors.

A solid strategy and strong execution provides a fulcrum upon which your differentiation can be leveraged. I have listed some sample questions to ask yourself for each point, but this is in no way an exhaustive list. Feel free to contact me at clientific.net if you have any questions or would like a custom assessment.

Strategy- What are you trying to accomplish?

• Clientele– Who are your target customers? Who are your best customers today? Are you targeting high net worth clients, with over $1 million in assets? Or the ‘merely affluent’, those with $100,000 to $1 million? What about the ultra high net worth– those with $25 million or more? All are attractive segments, but the keys for success are different for each segment.
• Clarity– What exactly is your value proposition? What problem(s) are you solving for your clients? What do you stand for? What do you not stand for? If you don’t have clarity about why you’re in the business and why others should do business with you, how will you expect your clients to know?
• Context– How does your firm fit in to the competitive landscape? Are your competitors big banks? Community banks? What about independent brokerage and money management firms? How do the legal and accounting communities address wealth management needs– are they referral sources or competitors? How will you balance all of your stakeholders– clients, shareholders, employees, community, centers of influence?
• Culture – What’s it like to work with you? What’s it like to work there? What kinds of things do you reward? How do you make decisions? What roles do you expect your team members to play, and how do they fit with one another? What kind of individual and team incentives do you have?

Execution- How are you going to do it?

• Competence– ‘Great service’ alone is not enough in wealth management. Your team has to have the technical skills needed to meet the complex borrowing, investing, financial planning and estate planning needs of your clients. They also have to have the ‘EQ’ to attract, retain and grow client relationships. How will you assess your team’s talent? How will you develop skills and hold people accountable? Are your current processes adequate, or will you need to adapt new talent management protocols?
• Consistency– Having great technical and interpersonal skills will only matter to your clients if you deliver results consistently and in a way that meets or exceeds their expectations. How will you manage consistent delivery and a consistent client experience?
• Client Intimacy– It’s easy to assume that positive, friendly client relationships are close and intimate; yet their are countless examples of advisors being shocked to learn important details from a client that are already well know by a competitor. How will you advisors move from information to insight? Think of the difference between a monaural AM radio broadcast and a Dolby THX surround sound experience. Often the difference involves understanding and addressing non financial goals and issues of your clients.
• Courage– It takes managerial courage to truly execute. The best plans and strategies are worthless without the tenacity and discipline to execute and make necessary course adjustments. General George S. Patton said “A good plan violently executed now is better than a perfect plan executed next week.”  Change management, sales management, coaching– all kinds of leadership– require courage and discipline.

Differentiation- What makes you different?

• Client Advocacy– The old saying “They don’t care how much you know until they know how much you care” is trite, but true. Clients have to trust you, and the most important element of trust is truly looking out for your client’s best interests. Character and integrity are table stakes, but you must be a true advocate for your client’s best interest. How do you demonstrate this to your clients?
• Client Experience– What’s it really like to be your client? What are all the touch points clients have with you, and do they represent your brand the way you want? What about the automated letter they will receive if they accidentally overdraw their account that typically maintains six figures? Will they receive the same letter as every other customer? What will that do to their perception of your relationship? Do your call center, web presence and mobile offerings support your brand or detract from it?
• Content– How do you communicate your ideas? You have already established what your company does and does not stand for, how do you demonstrate it? How do you present yourself as a thought leader? Do you have and communicate a distinctive viewpoint?
• Connection– Content is usually outbound, but you have to have inbound communication channels too. What kinds of events do you attend and organize? How do you use social media to engage your clients? How do you really understand what your clients think about your brand, what they like and don’t like about your policies and practices?

We have entered a new era and the days of simply ‘build it and they will come’ is over. Firms that successfully address these and similar questions will be the ones that will succeed in this complex new era of wealth management.

Related articles

• Five Shifts that Define the New Era for Wealth Management (jpnicols.com)

Top 10 Best Banking Blogs

(Via The Financial Brand) Congratulations to all of the winners in The Financial Brand’s Best Banking Blog poll. I am honored to count several of the winners amongst my friends. It is a group of smart, kind and funny people– what more could you want?

1. JD Power & Associates Banking Blog – @JDPowerBanking

2. Snarketing 2.0 – Ron Shevlin —  @rshevlin

3. ACTON’s Financial Marketing Insights – @ACTON_Marketing

4. Bank Marketing Strategies – Jim Marous  @JimMarous

5. Banking.com –  @bankingdotcom

6. CU Insight – Randy Smith @CUinsight

7. Bank Innovation – @BankInnovation

8. Netbanker –  @netbanker

9. GonzoBanker –  @GonzoBanker

10. Financial Services Club Blog – @FSClub

Congratulations as well to the Write-Ins & Other Honorable Mentions, along with the nominees, where I again am fortunate to recognize another great group of smart, kind and funny people I call friends. I am also humbled and grateful to even be mentioned in their company.

Again, from The Financial Brand, Write-Ins & Other Honorable Mentions:

• Andera Blog
• BankFutura.com
• Celent Banking Blog
• Filene
• FICO Banking Analytics
• Jeff for Banks
• jpnicols.com (!)
• Long Lasting Ideas
• Mark Arnold
• mFoundry Blog
• Perficient Financial Services
• SAP Banking Blog
• Shared iDiz
• SimpleCents
• Strategic Marketing by MarketMatch
• Tekfin
• The Bankwatch
• The Raddon Report
• TheBoldWar.com
• Tomorrow’s Transactions
• We The Savers
• Zoot Blog

Read the entire article, including links to representative posts from the winners at The Financial Brand: Top 10 Best Banking Blogs – Readers Choice 2012 Winners | The Financial Brand: Marketing Insights for Banks & Credit Unions.

Other nominees:

• Banking.com
• Banking4Tomorrow
• MattWilcoxPro
• Chuck Bruen’s CU Blog
• Visible Banking
• Javelin Strategy & Research Blog
• Finextra
• The Finacle Blog
• That Credit Union Blog
• Optirate
• Discerning Technologist
• MyBankTracker

I encourage you to bookmark these sites if you are interested in the future of financial services.

Related articles:

• Discerning Technologist Named Among Best Banking Blogs of 2012 by @FinancialBrand (bradleyleimer.com)

The Convergence of High Tech and High Touch in Wealth Management

I wrote a piece for the popular fintech blog netbanker yesterday on how high tech and high touch are converging in wealth management, and what I will be watching for in that convergence zone next week at Finovate Fall 2012 in New York.

In the article, I mentioned that most of the notable traction to date has been in the payments space. One might not think that this “dumb pipe” portion of banks’ business models– moving dollars and data from Point A to Point B– would provide such fertile ground for disruptive innovation, but consider the impact and potential of players such as Finovate alums Dwolla and Simple, as well as Square, PayPal, and others.

I also noted in the article that innovative specialty lenders and crowdsourcing platforms are breaching what had long been banks’ deepest moat–  the ability to monetize their balance sheets. Most simply defined, banks’ primary function is to be a financial intermediary. Besides moving money from one place to the other, they hold excess capital when it is not needed for investment, and lend it out when it is; providing liquidity to all sorts of macro and micro markets along the way.

Oligopolists acting like oligopolists

Even though there are over 7,000 banks (plus a similar number of credit unions) in the U.S. alone, the industry has long operated as an oligopoly. For the most part, it continues to act that way despite disruptive threats from all around. After all, their primary product is the ultimate undifferentiated commodity, money. Bank A’s money isn’t better designed, sturdier or more portable than Bank B’s.

Parenthetically, oligopolists acting like oligopolists has a lot to do with the reason most consumers hold banks in just slightly higher esteem than they do the U.S. Congress. Banks integrated vertically and horizontally, they bought weaker competitors, they raised prices, they made up new fees, they cut costs and maximized profits for shareholders with scant regard to other stakeholders, like, you know, their customers.

Predictably, smart players from outside the industry have visions for better ways of doing business.

As frightening as any of these threats should be to any entrenched bankers who are paying attention, the ongoing march of innovation should be scaring them right out of their moire suspenders. Innovators are moving beyond solving the algorithmic problems of the industry and beginning to tackle more dynamic and heuristic areas, such as wealth management.

I continue to reference a recent American Banker article cited a KPMG survey that said 9 out of 10 banks were considering a major overhaul of their strategy, and that 40% said that wealth management was essential to growing revenue in the future.

Wealth management is an attractive business, and if done right, the business can also be a key differentiator, but it requires the ability to develop, manage and leverage intellectual capital beyond the commodity that is the bulk of many banks’ current business models.

Not all will be able to make the leap.

Related articles

• Wealth Management 3.0 (Part 1 of 3) (clientific.net)
• Wealth Management 3.0 (Part 2 of 3) (clientific.net)
• Wealth Management 3.0 (Part 3 of 3) (clientific.net)
• The New Era of “Social Wealth Management” (infocus.emc.com)
• FinovateFall 2012 Sneak Peek: Part 1 (finovate.com)

USB CEO Davis Gives Advice to Bankers

Over the past two weeks I have been a Faculty Fellow at the Pacific Coast Banking School, the premier graduate school of banking, held at the University of Washington. It is energizing and humbling to be surrounded by so many talented students and faculty members.

At  last night’s keynote address, U.S. Bancorp CEO, President and Chairman Richard Davis gave his advice to the assembled crowd of over 500 banking leaders. Davis is known to like sports analogies as metaphors for leadership and strategic concepts, and he described the industry as being at halftime in a basketball game.

First, he described the industry in basketball terms:

The Rules: Changing

With Dodd Frank still only roughly one third finalized and work still being done to finalize global capital and liquidity standards, the rules are changing even as the game is being played. He urged the crowd to get with the decision makers and advocate for changes that might be needed, but not to complain. Complaining only gives permission to others to complain, and unless and until things change, the rules are the rules, and the team who executes the best under the rules in place will win the game.

The Venue: Poor

Davis likened the economic and regulatory pressures on the industry to playing in a poorly lit arena with a tilted floor, warped floorboards and where the air conditioning doesn’t work. What’s important to realize though, is that the competition is playing under the exact same conditions, and the team that figures out how to adapt their game to the conditions will win.

The Fans: Confused

The fans represent the customers, and they are confused because they thought they understood the rules of the game and some of their favorite teams didn’t perform very well. Some are fed up for good reason, but they will support a winner.

The Referees: Aggressive

Davis was clear in explaining that legislators and regulators all over the world are keen to prevent another global finanical meltdown, and thus are right in calling a tight game. It’s exactly what he would do if he were in their shoes, he said. Bankers need to understand this, accept it and step up their play to be successful.

The Owners: Seeking Success

Shareholders want their team to win, that’s why they invested in their franchise. Davis cautioned that the ROEs of the past few years for most banks are not covering their cost of capital, and that is unsustainable. Firms need to focus on growing revenue, lest they become takeover targets.

Halftime

He wrapped up his sports analogy by playing one of my all-time favorite clips, from Hoosiers. The undersized  team from little old Hickory, Indiana steps into Indianapolis’s Hinkle Fieldhouse wide-eyed and intimidated about their impending championship game in such a cavernous venue. Coach Dale (Gene Hackman) hands the boys a tape measure and asks them  to measure the distance from the foul line to the basket and from the basket to the floor. The players become visibly more confident as Coach Dale winds up the tape measure and says “I think you’ll find it’s the exact same measurements as our gym back in Hickory”.

In other words, we are all playing by the same rules on the same court. Don’t over-complicate it. Focus on what you need to do to win the game.

Davis then declared the game as being at halftime, and halftime is great because anything is possible. He urged the bankers to use the halftime break to assess what is working and keep it up, and to make the necessary adjustments, and most importantly to rally the team to a strong finish in the second half.

Not Just Another Lame Sports Analogy

Lest you think this is just another shopworn, hackneyed sports reference from just another executive too stupid or lazy to use his own words to describe what’s happening in his industry, you should realize that U.S. Bancorp is widely considered one of the best managed financial institutions on the planet. Their bond ratings, price to book, ROE, ROA and efficiency ratios are all absolutely at the top of the industry, and Davis has been at the helm since 2006, and has been a key senior leader there since 1993. He has a unique knack for using simple words to convey complex concepts, and the crowd gave him a rousing standing ovation.

Of course, I have my own biases. I worked for the bank for twenty years and saw Davis up close in a wide variety of situations, from one-on-one to very large crowds, from broad strategic issue to very deep operational details. He does it all very well, and he is simply one of the best leaders I have ever seen.

Even if sports analogies are not your thing, and even if you are not a banker, I think the core of the message is universal and enduring: Spend less time complaining about the rules, the refs, the venue, the fans, the owners and the other teams– just focus on what you need to do. And win regardless.

As Jim Rohn said:

“Don’t wish it was easier, wish you were better.”

© JP Nicols – 2012

Related articles

• U.S. Bancorp CEO Davis reveals caution for apartment financing in Chicago, Boston (bizjournals.com)
• U.S. Bancorp Upgraded to A+ by S&P as Earnings Outperform Peers – Bloomberg (bloomberg.com)
• US Bancorp Quarterly Profit Rises 18% on Revenue Gains – Bloomberg (bloomberg.com)
• S&P Raises U.S. Bancorp Credit Ratings (dailyfinance.com)
• Wow, I’m Actually Leaving My Day Job! (jpnicols.com)
• U.S. Bancorp Headed To $34 As Boring Banking Model Pays (forbes.com)
• U.S. Bancorp reports record Q2 (bizjournals.com)
• This Is One Incredible CEO (fool.com)