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Clients Do Not Want Help. Until They Do.

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(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 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 (See two surefire ways to irritate your customers. 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.

Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail?

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In my June 6 post 9 of 10 Banks Are Mulling an Overhaul I linked to the American Banker article that cited the findings from a KPMG study that also said:

“Forty percent of the respondents said that asset and wealth management would be essential to expand revenue over the next few years.”

But another article in the same issue of  American Banker (Missed Opportunities Abound in the Bank Channel) reported from the Prudential Wealth Management Leaders Forum in New York, which I also attended:

“…banks haven’t exploited the opportunity too well. From 2009 to 2010 banks’ and insurance broker-dealers’ assets under management shrank to $600 billion, less than 5% of the $14.5 trillion wealth management market. Meanwhile, discount brokers grew to $2.5 trillion, cornering 19% of the market. Also growing in that time were registered investment advisors, which command 13% of the market, and private banks and trust firms, which command 8%.”

Buried in papers

Is Wealth Management the New Holy Grail?

Bankers seem to be acting like Indiana Jones in his Last Crusade (…well, last until he sought the Kingdom of the Crystal Skull, but that’s another post… OK, probably not.) in their pursuit of the Holy Grail and its promise of immortality.

A flat (and further flattening) yield curve, low loan demand and regulatory pressures on fee income and capital needs are causing bankers to seek new avenues for growth. (See also Is Bank Merger Mania Imminent?)

It’s easy to be attracted to the net overall growth of the affluent, high net worth and ultra high net worth segments and the impending transfer of $41 trillion in wealth from the baby boomers to younger generations.

But as the American Banker article points out, there is a huge gulf between “opportunity” and “success”. Over the past thirty years, a ‘build it and they will come’ strategy worked at some level for nearly everyone. Those days are long gone and they won’t be coming back.

No Easy Fix

Firms that want to gain market share from others will need to deliver true value to clients.

At the same Prudential Wealth Management Leaders Forum, Wallace Blankenbaker of the VIP Forum described the key drivers to loyalty– serve, tailor and teach. Clients want firms that are easy to do business with, firms that look out for their best interests and firms that can help them make better decisions.

If firms fail to deliver on those key drivers, funds will continue to flow from them to competitors that can deliver.

Wealth management isn’t the Holy Grail. It’s a specific set of services designed to solve the unique issues and meet the unique goals of a specific set of clients.

As I have said before, Don’t repaint the walls when you need to fix a cracked foundation.

“You must choose, but choose wisely. For as the true Grail will bring you life, the false Grail will take it from you.”

-The Templar Knight guarding the Holy Grail in Indiana Jones and the Last Crusade

Two Surefire Ways to Irritate Your Customers

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This is my shortest post ever. I have sat in numerous financial services conference sessions over the past several days as I try to contemplate all of the ways that the megatrends of  social, mobile, analytics and cloud might impact the future of the client-advisor relationship. One of the biggest things for me is to figure out is how strongly Generation Y‘s current preference for self-service will prevail as they face new life stages and increasing financial complexity in the future.

There are lots of conflicting research, opinions and predictions, and I struggle to assimilate all of the data, but I think I can safely say that either of these two methods will irritate the wealth management clients of the future as much as they do today:

  1. Force your clients into self-service options when they want someone to help them.
  2. Force your clients into getting someone to help them when they want to do it themselves.

You’re welcome. My consulting bill is in the mail.

Congratulations Finovate Spring 2012 Winners!

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Congratulations to the Finovate Best of Show winners (in alphabetical order):

All in all a great show, and I enjoyed meeting lots of great people as I explore the intersection of leadership, advice and technology. More of my impressions and my personal favorites coming soon.

BehavioSec

BillGuard

Dwolla

iQuantifi

MoneyDesktop

Personal Capital

SoMoLend 

Five Things Banks Can Learn From Start-Ups

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Most bankers don’t spend a lot of time with start-up companies. The need for bankers’ loan decisions to be right 99% of the time tends to not  mix well with most start-ups’ risky and voracious appetite for capital.

Outside of a few bankers in Seattle, Silicon Valley and a few other places, the clear exception is the banking innovation and financial technology (fintech) communities. We all get together at great conferences like Banking Innovation and Finovate, and I always learn from bankers, large vendors and entrepreneurs alike.

The best start-ups have lessons that a lot of bankers would do well to learn:

1. Start with the customer

Start-ups that take off and grow are usually designed around a specific set of customers, whose needs and preferences are deeply understood. Most banks want to be all things to all people, so they end up being nothing much to far too many. Of course, there are some interesting exceptions. For some really thought-provoking ideas read about niche banking from Tribed, whose CEO Jeff Stephens I had the pleasure of meeting at a recent conference.

2. Know your value proposition

Great start-ups understand what problems they solve for their customers. They know their pain points how their solutions add value. Many banks are still oriented around selling products that may or may not solve any specific problems. Worse, customers have an even harder time perceiving value from the myriad of add-on fees that too often are not linked to any value-creating activities.

3. Iterate regularly

By their very nature, start-ups that survive and thrive stay close to their customers and make regular iterations of their offerings to better tailor it to what their customers want (and not necessarily what they say they want). While bank customers don’t want change simply for change’s sake, well-considered tweaks for well-defined reasons increase satisfaction and loyalty.

4. Keep it lean

I worked many years for a CEO whose simple mantra was “grow revenue faster than expenses and great things happen”. My review so far of banks’ 1Q earnings shows a continuation of a fair number of banks growing expenses faster than revenue, some of them with efficiency ratios (non-interest expense as a percent of revenues) in excess of 65-70% and even higher. This is not sustainable. If the revenue challenges cannot be met, expenses will have to be cut to maintain EPS growth. Otherwise, merger mania may indeed by imminent, as I have previously posted.

In the start-up world, the dot com boom rally cry of “get big fast” has largely been replaced by lean and mean infrastructures. Instagram– which just sold itself to Facebook for a a billion dollars– has barely a dozen employees.

5. Protect your capital

Entrepreneurs know that capital is precious and they have to allocate it wisely. Signing that expensive lease on a fancy new office suite may mean that you can’t make that critical server upgrade or hire that new business development manager.

Bankers should know that capital is precious too, but I see evidence to the contrary so often that I wonder sometimes. The financial meltdown revealed huge leverage ratios and loan books filled with poorly underwritten loans that quickly depleted capital reserves.

Today’s slow growing environment is causing bankers to be tempted to forget this lesson in the quest for loan growth. Which is why I always say that bankers need to think like private fixed income investors.

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Do you have what it takes to succeed as a business developer?

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Nice post, reblogged from Financial Sales Pro:

Click here to read the entire article: Do you have what it takes to succeed as a business developer?

Excerpt:

What’s the activity level?  So you’ve got a great plan, now what?  Implementation is the key.  We all know BDOs who spend days, if not weeks, sitting in their office fine-tuning marketing materials, letters, etc.  In my opinion, this is clearly not the best use of a BDO’s time.  If a BDO’s activity level doesn’t match what’s been laid out in the initial plan, then you may be heading in the wrong direction.

I have long subscribed to a very simple sales management process:

  1. Activity: Always start by ensuring that advisors are getting out of their office and meeting with enough clients and prospects. Nothing else in sales management much matters if not.
  2. Effectiveness: If advisors are conducting enough meetings but their close ratio is low, they may need specific skills coaching. Practice sessions and joint calling can be effective techniques.
  3. Efficiency: Your top 20-25% producers are probably fine on activity and effectiveness, so often the key is finding ways to free them from non-selling activities and get them more time in front of clients and prospects.

Do all of your BDOs have what it takes?

Top Ten Geek Week Sneak Peeks – Part 2

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Today: The GeekWire Summit

Startup technology news site GeekWire held its first birthday party on March 7 with the GeekWire Summit. Speakers included former Microsoft Chief Software Engineer and Cocomo co-founder Ray Ozzie, former Swype CEO Mike McSherry, Hulu CTO Richard Tom, T-Mobile CMO Cole Brodman, Rhapsody President Jon Irwin, venture capitalist/serial founder Oren Etzioni and other great technology minds. Nothing was focused on FinTech per se, but nonetheless here are some highlights and potential implications on the intersection of leadership, advice and technology in financial services:

“How do large companies innovate? They buy small companies.”

– Oren Etzioni

  1. On the rise of social collaboration in the enterprise, Ray Ozzie paraphrased Ethan Zuckerman (who also has a lot of interesting things to say about how we tend to interact with people who are most like us, but that’s another post) in describing the “scopes of voice” as public/private/secret/self :“I think when you get into enterprise and business scenarios, there are some organizations where speaking publicly in a public voice is very useful. Professional services firms promote an internal culture where speaking openly and being known as the professional who knows something about something works a lot better than certain manufacturing company, where the internal norms might be different in terms of secrecy and confidentiality.”  There is still lots of opportunity, but also lots of work to do, since only 27% of financial professionals use LinkedIn, and less than 4% use any other social media methods at all.
  2. Do you think that building a massive base of clients/users/followers is in direct conflict with customizing your messages to be relevant individual users or subgroups? Consider that Hulu  has 1.4 BILLION ad impressions per month, but they offer some innovative ways for users to customize their ad content. Ad Selector allows viewers a choice of three ads from one brand or one ad from a selection of three different brands. Ad Swap allows viewers to find ads that are most relevant.
  3. Great discussion on the state of mobile technology. All on the panel had praise for the Windows Phone platform, but noted that they have a long way to go with a 4.4% market share to Android’s 49% and Apple’s 30%. (IMHO, I think that RIM’s enterprise-centric 15% share is the most vulnerable to Windows, and it’s already down 2% in the last three months.) Former Swype CEO Mike McSherry said that Apple’s Siri natural speech style will help improve text entry over time too. This evolution to more natural interfaces and input styles was also noted at Micosoft Research on the prior day.
  4. Startup investor and advisor Hadi Partovi noted that the cost of sequencing the human genome has gone from $1 billion to $1,000, and predicts it is heading to $100. If that can be democratized, how naive are we about “big finance”?
  5. Facebook’s Director of Engineering Jocelyn Goldfein said that the company rolled out the new Timeline with a team the size of a startup. Facebook video chat? One guy. In Seattle. Although, that may be taking the lean approach a bit too far. (As someone retorted on Twitter “That explains a lot.”) Still– how many consultant engagements, project managers and steering committee meetings do we need to make meaningful change in our business?

“It’s not enough to encourage employees to innovate.

You have to protect them from the cost of failure.”

– Jocelyn Goldfein, Facebook

(P.S. – I live tweeted my new startup idea from the conference: Embedded QR codes in public carpeting. Remember, I get a 20% Founders Fee.)

Yesterday: Microsoft Research TechFest 2012

Free Advice From a Mentor

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(Note: When I wrote this early in my blog’s history, when I was a senior executive for a Fortune 150 financial services firm. Now with the added perspective of an entrepreneur and consultant, I find the words truer than ever.)

I have mentored dozens of young professionals over the years, and even though each situation is unique, I always end up giving these three pieces of advice. It’s not like I planned it all out, or even wrote it out before now, but here they are:

  1. There is no secret handshake
  2. Focus on getting better, not getting credentials
  3. It all starts with you

There is no secret handshake

The CEO of a venture-backed technology company whom I know well once asked me: “Do you ever get the feeling that when someone comes to you for career advice, what they’re really looking for is the secret handshake?” 

Yes, I have gotten that feeling.

My best mentoring relationships have involved mentees who truly want to improve their performance, learn new skills, take on more responsibility or just learn more about what a potential career path might look like for them.

The best way to ensure that a mentoring relationship with me is short (and not particularly rewarding for either of us) is to mistake it as an opportunity to simply learn the secret handshake.

Do you really think I’ll hire you or connect you with someone merely because you want more money or a better title?

Put some clothes on that naked ambition, you’ll catch a cold.

Focus on getting better, not getting credentials

I often get questions like “Should I get an MBA (or any one of the alphabet soup of certifications in the financial industry: CFA, CFP®, CIMA, CTFA, etc.)?”

My consistent answer to all who ask is that if you want to learn more about that particular area and want to study it deeper, go for it. I’m a big believer of continuous learning, and earlier in my career I worked to get an MBA and put a few initials after my own name.

On the other hand, if you think that simply tacking those initials after your name will open a whole new world for you, you will probably be disappointed.

I still remember a soon-to-be-freshly-minted MBA who wanted to ‘remind’ me that he would have this very important graduate degree by the time of his next performance review, and that he hoped that would qualify him for a promotion.

I ‘reminded’ him that he was still the same person with the same level of performance, so probably not.

It all starts with you

This is kind of a two-for-one. First, I mean that before you start on any exploration of future paths, you need to understand your strengths, your passions, what gives you energy and what saps you dry.

I also mean that the whole process of working with a mentor isn’t a passive activity of absorbing second-hand knowledge through osmosis.

I was very proud and excited when my company asked me a few years ago to participate in the pilot of a program called MentorConnect, kind of an internal match.com to put mentors and mentees together based on specific skills and experiences.

I learned to start by asking mentees to share any relevant standardized test results they may have taken recently (Meyers-Briggs, PDI, StrengthsFinder, DiSC, etc.), and if they didn’t have any, I had them start with StrengthsFinder 2.0. Not only did this help give the mentee and me a logical starting place, it helped to quickly identify those who were only looking for the secret handshake. Those types often would not do the work.

I also recall the bright young assistant who was referred to me by her boss for some career advice a few years ago. She wasn’t sure what she wanted, but she was sure she should be higher in the organization by now. I took her to lunch, and we talked for an hour and a half. I gave her a couple of books to read for our subsequent meetings. I must have followed up three of four times when I ran into her, but she hadn’t quite found the time to even buy the books, let alone read them.

I guess I wasn’t completely surprised when she dropped by a couple of months later to let me know she was quitting the firm.

She was going to work on her MBA.

And no doubt continue her quest for that elusive secret handshake.