Bleeding Customers
In the financial advice industry, new customers are a rarer commodity than advisers would like.
They’re hard to come by and even harder to hang onto, often due to the average client’s inability to decouple investment performance from advice and strategy, making it difficult to determine value when markets turn sour.
There are a number of barriers that prevent people from even picking up the phone to make an appointment; namely cost, trust and accessibility.
So when an adviser is contacted by an attractive potential customer – someone with more than $100,000 in investable assets outside of their home and super who is aged 45 or over – you’d expect them to make every effort to turn that person into a client.
CoreData’s latest financial planning shadow shop, which is currently underway, suggests that this is not the case.
Over the past couple of months we’ve arranged for more than 300 mystery shoppers to go through the process of making an appointment with a planner right through to becoming a client (or not), and asked them to report back to us on their experience.
This year, one third of shoppers have dropped out, frustrated and often in despair at the difficulty in getting through the door. Others have agreed to go ahead, despite being told by the practice they’ll have to wait up to six weeks to get an appointment.
Six weeks? Your GP doesn’t make you wait six weeks for an appointment and they’re servicing 100% of the population!
Some of the reasons given by shoppers for cancelling their appointments are listed below:
- Asked to pay an upfront fee (ranging from $100 to $250) just for the privilege of an initial appointment;
- Lengthy waiting periods;
- Unable to get an appointment (no response to emails and calls requesting an appointment);
- Websites that are impossible to navigate;
- Offered only a phone meeting rather than a face-to-face;
- Denied access to an independent adviser due to an insurance policy with the company, which insisted the would-be client see a representative attached to the policy.
What hope has the industry got of expanding its reach in the broader market when wealthy, willing customers are falling at the first hurdle?
*CoreData’s 2010 Financial Planning Shadow Shop Report will be available in late November
4 Comments on “Bleeding Customers”
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Ray Costello says:
This is an extraordinary finding and counter – intuitive.
Counter – intuitive, at least for advisers trying to build a business, which is almost everyone in the non-aligned sector of the industry.
Who were these shadow shoppers contacting?
burningpants says:
Gazman, thanks for your comment. The shoppers were allocated a licensee and told to use the website or phone book to get in touch with the company. We are shopping 18 licensees across the industry.
We understand that some advisers will not be able to service the shoppers that come to them, but as you point out, that doesn’t mean they should ignore the potential prospect. Some companies/planners have rightly referred the shopper to a more suitable planner.
I think you’re correct in saying that the phone-based model of advice will become more common in an intra-fund advice environment – and for some potential clients, this will be a quick and easy way to establish whether or not their needs can be met via a full-service advice offer, or whether proceeding would in fact be a waste of time and money from both a client and adviser perspective.
Louise says:
Ask the shadow shoppers to see me, I will see them in 20 mins.
gazman says:
Pretty poor response from some advisers.
I have a question – who were the secret shoppers targeting for advice?
With $100k, even $300k to invest – I can’t make that work in a business sense. If I received a call for that amt, I would explain that my services would be too expensive relative to the monies they have to invest.
What I wouldn’t do is not treat them with respect – I certainly wouldn’t ignore the call or email.
I can understand a company saying that the original adviser must be the one to deal with a client for subsequent business. This is designed to stop unsavoury cannibalisation of clients within a company.
Phone meetings – that’s about big companies herding low value clients to call centres leaving advisers to see higher value prospects. I suspect that you’ll see more of this as the fee/commission issues work their way through the system.
Easy to see why companies do it and they’ll get pilloried for it. But people should look at what industry funds are doing in this space to make advice affordable – advice by phone.
Phone advice will become more commonplace in this space.