Dear Advisers: It’s Time You Focused on Jointly Creating Value With Your Clients

The fact that 91 percent of clients are satisfied suggests that much of the time you invest in driving satisfaction, while important, makes you precisely as good as almost every other adviser. Sad, but true.

Saying that the industry has achieved extraordinary levels of satisfaction, but that it’s simply not enough, is a little like giving advisers a collective pat on the back while simultaneously slapping them upside their heads. I get it, but the reality is that satisfaction gets us to “good,” not to different and not to great.

This simple premise is the foundation of much of the client engagement work I’ve done over the last several years and I’ve argued vehemently — if not always articulately — that client engagement is the new standard that we need to set, one that benefits clients, advisers and the industry as a whole. The results are the same in the three countries in which we’ve conducted the research: the U.S., Canada, and the U.K.

With a strong baseline of research in place, it’s time to look forward and examine if — and how — client engagement is changing, moving us from the theoretical into the tactical. So try this on for size.

The future of client engagement is about the co-creation of value.

Instead of asking what can we offer to clients, in order to drive engagement, we need to change the question to ask what we can create with clients in order to drive engagement. By changing two words, we open up a world of possibility.

The concept of co-creation of value has a credible analytical history going back to the 1970s. In many cases the term is used, simply, to underscore the importance of client input in understanding value. However, I want to extend the concept beyond that acknowledgment to focus on how clients can actively contribute to value creation and, therefore, engagement.

(If you are curious to understand more, you might start with the Harvard Business Review article Co-Opting Customer Competence by C.K. Prahalad and Venkat Ramaswamy.)

Co-Creation of Value and Financial Services

For our purposes, co-creation of value is defined as the process by which both adviser and client collaborate to both define and create value. The involvement of the client is an integral part of the value that is delivered; the two cannot be separated. Because the client has an active role in shaping the experience, that value cannot be easily replicated.

To make my case I’ll look at value through our experiences with credit cards, doughnuts, and pedometers (obviously).

Co-Creation of Value: The Credit Card

Recently Apple announced the launch of Apple Pay. Key to the development process is that Apple, as only Apple can do, designed the product around the way in which people pay with credit, rather than around an existing revenue model. Client behavior drove development and, therefore, the offer.

What could that mean to our industry? The reality is that we have, historically, built the offer around our needs so perhaps we should be asking different questions.

• When do clients think about money and how can we ensure they have the right information at their fingertips in those moments?
• How do clients talk about money and can we support them in meaningful conversations?
• When do clients think about their retirement and what does that mean in terms of how we help them access their plan?

My goal isn’t to answer those questions but to make the point that advice, in the future, might be delivered very differently if we start with the way in which clients think about, talk about, or experience money and retirement. What would a “plan” look like if it was a living thing that clients could access when needed? Is the old “document” being replaced by Google Glass?

Value is co-created when the offer is built around the actual behaviors of clients, rather than trying to bend behaviors to meet our offer.

Co-Creation of Value: The Doughnut

Tim Hortons found itself in the news recently when Burger King announced its plans to acquire the company. Until now, and with some minor geographical exceptions, it has existed as a very successful Canadian secret and coffee obsession. I stopped at Tim Hortons recently, for a morning caffeine boost, and noticed a sign that smacked of co-created value.

“Help Us Choose Our Next Doughnut.”

Tim Hortons was putting me on the product development team and inviting my input into the final product. This is a fairly traditional, but very effective, example of co-created value. The way in which I experience the product is changed or enhanced because I have a hand in its creation (if I had actually cared enough to vote for a doughnut, of course).

How Could This Translate to Our Industry?

1. Gather Client Feedback.

Client feedback is a powerful tool in driving engagement for two reasons.

• It allows you to refine your offer. If we think about the doughnut example, client feedback can help us understand what is important to clients, to refine our offer and service strategy and to customize the experience in a meaningful way. Beware of the limitations; if you ask clients how you can improve your offer, they may be ill-equipped to respond.They don’t know what they don’t know. In order to generate meaningful input on what you deliver and how you do it, you’ll need to tease out the gaps and focus on client priorities; this may involve a mix of qualitative (advisory board) and quantitative (survey) feedback.
• It changes the client conversation. As important, client feedback opens up a meaningful dialogue about what is important to your clients. The value is created through the iterative process of asking for feedback and then discussing those results with the client. Beware the limitations; if you ask for feedback and do not follow up on the results, clients will feel they may as well have shared their views with a houseplant.

In the end, in order to really understand clients and craft an offer that is reflective of their needs, you will need to rely on three types of input: what you know about clients (e.g., their financial situation), what they tell you (e.g., client feedback) and what you observe (e.g., behaviors around spending).

2. Customize communications plans.

Another example, using the doughnut as our guide, involves the client co-creating the communications plan, based on his or her interests. For example, rather than telling clients exactly what they can expect, what if you talked them through a menu of choices and crafted a plan that was exactly right for them?

I’m not suggesting free reign here, but a constrained set of choices based on the value of the client. By reviewing and selecting the options together, you might find out that I would value carefully curated third-party articles but would only attend a workshop under threat of violence.

You allow me to choose the communications that are most valuable and learn more about what matters. In the process we are co-creating the value I receive.

Value is co-created when the offer is based on my feedback. I have some ownership in the service I receive.

Co-Creation of Value: The Pedometer

I have written previously about my love affair with my Fitbit. It’s back again as one of the more compelling examples of co-creation of value. In the past, a pedometer was a good way to track the number of steps you had taken. You checked the number and felt good (or mildly ashamed) and started again the next day.

The Fitbit has changed the entire experience by actively involving us in the process. We set goals, get rewards, compete with our friends, and check our dashboard for progress.

The value I receive from my Fitbit is inextricably linked to my involvement in using the product. The same product is “offered” to everyone. But the actual experience may differ dramatically from one person to the next based on how we set goals, what we track, and if or how we compete.

So how does this relate to our industry? To understand the opportunities, consider putting yourself in your client’s shoes — conduct a Client 360. Walk though the entire client experience as if you were your client.

What happens prior to review meetings, during the meeting, and afterward? Ask yourself a simple question at every step: Where are the opportunities to involve the client in a more meaningful way?

As we begin to think about these opportunities, it’s critical that we open our minds to the possibility that things are changing. Even more so, we must remember that technology will play a greater role in how we work with clients in future.

1. Co-Create the Meeting Agenda.

Consider how you can actively involve the client in shaping the conversation in the client review. Some examples include:

• Building your meeting around the lives of your clients. Some advisers hold an internal strategy meeting with the team prior to a client review to gather input on what should be addressed. The agenda starts with an internal examination of client needs.
• Sending a worksheet in advance of meeting to get up to date on what, if anything, has changed, from the client’s perspective (employment, family situations, goals, concerns). The agenda is refined based on input from the client.
• Following your clients on social media to ensure you are up to date on key changes in their lives and understand what is important to them.
• Sending an agenda in advance of the meeting to ask if the client would like to add anything. Put a blank space at the top of the agenda to ensure those questions/issues are addressed first. Alternatively you may want to call the client directly once the agenda has been set, to review and discuss if all the key issues are being addressed. Clients may be more likely to respond in a conversation than an email.

According to research from the FPA’s Research and Practice Institute, only 9 percent of advisers say they always send an agenda in advance of a meeting; 27 percent say they do so sometimes.

Value is co-created when the review meeting reflects what is both current and important to the client.

2. Create a More Engaged Client Review.

Moving into the actual review, we see new forms of co-creation. Here we are seeing innovation in getting the client actively involved. This happens both through the questions asked and the technology used. Advisers are actively involving the client in creating the experience.

Consider making your reviews interactive (literally). Technology has opened up entirely new ways to involve the client in co-creating their plan and experience. In the FPA-RPI study noted above, advisers shared ideas on how they are working with clients to bring the process to life during the meeting, including making the discussion interactive and visual and playing out scenarios together, rather than following up with a written report.

Among the ideas that advisers shared are the following:

• Use a 60-inch wall monitor to display everything during the conversation. Open the planning software and use Evernote/iPad to record notes.
• Use a mind map (e.g. Mindjet, SmartDraw) to create the family tree or visualize goals.
• Make use of Go-to-Meeting for remote meetings.

Value is co-created when I am physically and emotionally involved in the planning process.

There is one final question when it comes to co-creation, and it involves defining the client. With whom are you creating value? An individual client? A couple? A family?

Your answer to that question will impact how to define and deliver on value and with whom the co-creation takes place.

In the final analysis, we can take comfort in the fact that clients are satisfied with the experience today. At the same time, we need to take a hard look at the future and ask ourselves if that is enough. Those advisers who are embracing engagement as one of their key goals have a growing arsenal of tactics at their disposal.

As a result, they can create an experience that is meaningful and differentiated. It’s not that things are changing, but that they have changed. As an industry, we might just need a nudge to recognize that fact.