Why do financial advisers make such terrible clients?

Some say it’s bad form to use a business blog to wage a personal vendetta, but I’m far from the first – I may even be the last.

Honestly, this is really true, not just brown-nosing – in the seven years since I launched Lucian Camp Consulting, the overwhelming majority of my clients have been an absolute pleasure to work for.  They’ve ticked all three of what I think of as the Good Client boxes – they’ve been friendly and amiable, they’ve been receptive and they’ve been open and communicative.  (Actually nearly all have ticked a fourth box too, come to the think about it – they’ve paid up remarkably quickly on receipt of their invoice.)

So, lots of grateful thanks to a long list of admirable firms and individuals.  But, there’s no denying, it’s an incomplete list.  If you grouped all those clients – I guess there must be either side of a hundred of them – into financial services industry sectors, while most sectors would be basking in warm sunlight there’d be one beset by dark clouds and rain.  Yes, the exception would be the independent financial advice firms.

I should say that a few years ago, I doubt whether this sector would have been represented at all.  Very few of the thousands of firms in this fragmented cottage industry could see any sense in spending money on people like me.  Most, quite frankly, wouldn’t have bothered even if my services were on offer free of charge – marketing and branding and all that daft colouring-in nonsense just seemed like a waste of time.  But as a waste of both.time and money, well, no-brainer.

It was the RDR that changed things, and specifically the bit about needing to tell clients what they’d get in return for that “ongoing adviser charge.”  (Previously, of course, that was what had been known as “trail commission,” and what most clients got in return for that could be briefly summarised in the word “nothing.”)  This new need for advisers to justify the ongoing charge connected strongly to what people like me call “defining the value proposition,” so all of a sudden I found I was speaking on this topic at quite a few IFA events and leaving the events with a pocketful of business cards from advisers wanting follow-up meetings.

Which all sounds great, except that it really hasn’t been.  In case any of my adviser clients are reading this, I should say that two or three have been lovely.  But most really haven’t been very lovely at all – not easy at a personal level, suspicious and dubious about everything I have to say to them and, probably worst, hopelessly uncommunicative.  The default is that most just don’t reply to things.  They don’t answer phones or respond to voicemails or emails.  The only time when they’re not maintaining a couple of months’ worth of radio silence is when they are in fact maintaining a permanent period of radio silence, having just decided to stop dealing with you without ever quite getting round to saying so.  And, needless to say, as regards that fourth box, a well known expression about blood and a stone is the only one that comes to mind.

The reasons for all this, I do appreciate, may be a) good and b) circumstantial    The firms I’m talking about here are small, and no doubt both busy and under-resourced.  And I suppose there is some benefit to me in these otherwise useless experiences – as the proprietor and indeed entire workforce of a small firm which is often busy and arguably under-resourced, they do give me the clearest possible education in the art of pissing your clients off.

The theory behind this born-again blog is that I’m supposed to choose topics that whet your appetite for my forthcoming book on financial services marketing, co-written with my old friend Anthony Thomson.  This morning, though, I’ve gone off-topic.  There’s nothing in the book about (most) financial advisers making rotten clients.  Which, if you’re among those who think this kind of personal grumbling is n’t really appropriate, is probably just as well..

Robo advice. Still happening, still a stupid name, still a mystery.

Looking back at entries in this blog written before the Great Suspension (i.e.before April 2016) I’m surprised how many of them are about robo advice.  This is a subject that still feels like fairly new news to me, or at least like a fairly new (as well as stupid) name.  But in fact I was grumbling about the stupidity of the name back in late 2015, and expressing major doubts about the viability of the whole concept at the same time.

The viability doubts all focused, one way or another, on a single issue:  are we sure there are enough consumers out there who are keen to engage with services like these?  As I’ve said a million times, there is certainly a small number of enthusiastic investment “hobbyists,” who love everything to do with investing and make up the bulk of the customer bases of most established D2C investment services (particularly Hargreaves Lansdown).  But is it the case that just below them in the pyramid there are a few million potential investors, ready to become more engaged and active if only they could find a nice, simple, accessible service which they felt comfortable with?

There is undoubtedly a “next level down” more or less like this in a great many markets, and welcoming them in with that nice, simple accessible new option can be a very successful and profitable thing to do.  I could argue that in (fairly) recent years this has been the secret of the success of car manufacturers with “hot hatchbacks” from the Golf GTi onwards;  of the “casual dining” sector with restaurant brands including Cafe Rouge, Frankie & Benny’s, Carluccio’s and Nando’s, among dozens of others;  and in a slightly different way of the game-changing success of low-cost airlines like easyJet, Ryanair and Norwegian.

But is it true in investment?  Of course the “next level down” investment brands will pick up some business from curious, promiscuous hobbyists, just as my automotive, restaurant and airline examples  have done.  But that’s not how you make the big money – you make the big money when you find the formula that expands the market.

In robo advice, I’ve never believed that any of the existing players has come up with a propositiion anything like simple enough, a brand anything like appealing enough or a marketing budget anything like big enough to become the GTi, Cafe Rouge or easyJet of the sector.

It seems that quite a few of the existing players share my doubts, because one thing that has been happening while I’ve been away is that a number have been partnering with, or indeed being acquired by, big institutions who, it’s believed, can give them access to millions of warm customers and wonderfully nice low cost.

This blog, indeed, has been triggered by an announcement of another of these partnerships, with the oddly-named Scalable Capital partnering in some sort of way with Dutch bank ING.  (Is it just me, or is there something a bit troublingly reptilian about that “Scalable”?)   Blackrock already owns a big slice of Scalable, and of course Aviva has bought Wealthify,  LV= owns Wealth Wizards and Schroders has invested a lot of money into Nutmeg.

At boardroom level, I’m sure all these deals make excellent sense.  But out there in the market?   I’m still not detecting much excitement in the pyramid’s middle tier

To be honest, I can’t actually remember if we develop this theme in our forthcoming book on financial services marketing, No Small Change, written jointly by my old friend Anthony Thomson and myself and due for publication in the last week of May.  All I can say is that there may well be.  I’ll give you the pre-ordering details as soon as I have them,. and you can find out for yourself..

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Seems we still can’t stop asking too much of our customers

Back in the day, one of the themes that came up time after time in this blog was about people who are in the industry asking too much of people who aren’t.  We say things that are too difficult for most to understand and come up with products that are too complicated for most to use.

For decades, the result has been that many of the ideas that we’ve intended for ordinary people have been taken up by people who aren’t ordinary at all.  Investment services like Nutrmeg, for example, originally intended fore the inexperienced investor, find to their surprise that their customer base consists largely of exactly the same “hobbyist” customers as existing, mainstream investments.  The supposedly mass market Pension Wise guidance service is mostly used by hobbyist retirees fine-tuning their knowledge and their options.  A few years ago Stakeholder Pensions, intended as the most mass-market of all long-term investments, were principally adopted by affluent hobbyists as a way of boosting their tax-free contributions (they opened plans in the names of their kids, nannies and cleaners).

It’s early days, but I’d say the signs are that it’s happening again, this time around the big and potentially game-changing idea that’s called Open Banking.  So far, I’ve failed to understand more or less all the media coverage that I’ve noticed – but the one message that has come across is that Open Banking makes it easy for me to see the state of all of my finances in one place.

To hobbyists, and crucially within that term I include the very large majority of people working in the industry, that sounds great.  It’s a self-evident good.  Of course I’d like to be able to see all my finances in one place.  It would be really interesting.  And useful.

To most of the rest of us, it’s a proposition that’s of no interest at all.  We’re not that interested in looking at our financial position at all, whether they’re in one place, or a few places, or lots.  It’s about as useful and appealing as being able to look at all our books in one place.  Or all our houseplants.  Or all our carpets.

These are things that we don’t really look at very much at all, and when we do we’re perfectly happy if they’re not in the same place as other similar things.  It’s a bit irritating if we’re looking for a particular book and can’t find it, but it’s not a problem often and we know where to find the ones we refer to frequently.

There are things which it obviously is convenient to keep in one place – clothes, for example, or cutlery, or music (whether physical or virtual).  These tend to be things that we need to choose from frequently, and/or to put together in combinations (whether place settings, outfits or playlists).  Financial services don’t come into this category.

Once you’ve put your financial products together in one place, there is of course the potential for some enormous second-order benefits.  It’s possible to save a great deal of money, to take advantage of propositions that meet your needs much better and do the financial things you need to do a whole lot more easily (I’ve been told a hundred times in the last few months about the imminent arrival of the “one-click mortgage.”

These are all great and exciting things, and could form the basis for simple, understandable propositions that might actually cut through and engage people.  (The role model, as so often in this blog, is of course price comparison sites, which have cut through and engaged through a winning combination of simplicity of proposition and hugeness of ad spend.)

It may well be that eventually Open Banking will reduce down into similarly powerful, simple messages expressed with similarly huge ad budgets.  But for the time being, it’s hobbyist speaking only unto fellow hobbyist.  Most of us absolutely aren’t excited at all.

In the old, pre-sabbatical blog, that would have been the end.  However, in the new born-again.blog it isn’t.  The plan is now to close, pretty much invariably, with a plug for the book.  It includes a lot more on this theme, our habit of asking too much of our customers and over-estimating their level of interest in the financial services world.  You can’t pre-order it on Amazon yet – but when you can, you’ll be the first to know.

 

Still circling over Rickmansworth

Whenever I talk to anyone about the book, the first thing they always want to know is when it’s going to be published.  Embarrassingly, though, even at this late stage, I still don’t really know.  To be fair, while the uncertainty was initially down to our publishers, the tables have now been turned and it’s now pretty much entirely down to my co-author:  the publishers have told us that we’re now clear to make our final approach and touch down in the second half of April, but at that time Anthony is in the middle of an exhausting programme of long-haul travel and will be, consecutively, in Bahrain, the US, Peru, Chile and Australia during the crucial period.

This is obviously unhelpful from a PR point of view because, let’s not kid ourselves, “Europe’s leading challenger banker writes financial marketing book” is the story here.  It’s not particularly helpful from a patience-of-his-co-author point of view either – after all, I basically finished writing the thing last summer, and have been circling over Rickmansworth waiting for clearance to land ever since.

And of course there is a fairly serious danger that in this fast-changing world,  by the time it finally appears it’ll be terribly out of date.  If so, then hopefully judging by previous examples it’ll only be out of date in detail, not in its main themes and conclusions.  While researching the chapter on data-driven marketing, for example, I was amazed by the strategic foresight and prescience of Peppers’ and Rogers’ 1994 masterwork The One-To-One Future – despite their firm conviction that the emerging one-to-one media that were about to transform consumer marketing were the fax machine, something called “interactive radio” and seat-back advertising screens on aircraft.

I shall have to go back over our manuscript and look for signs of similar misjudgments.  I suspect all those prices quoted in groats and guineas are going to have to go.

 

I’m back. And yes, indeed, it was a while

A bit less than two years, but a bit more than eighteen months – long enough to raise a question about whether I’m restarting my old blog, or starting a new one.

Definitely the former, I think.  For one thing, in purely practical terms I don’t know how to start a new blog.  And for another, content-wise, I’m sure I’m going to be picking up exactly where this one left off, repeatedly running through a grab-bag of half-a-dozen riffs more or less beating up financial services marketers for not being nicer to their customers.

There is one difference, though.  As I hope will become increasingly clear, this time around I’m riffing with a purpose – the purpose being to encourage both my readers to trade up, in due course, from free-to-read blog to £29.99-to-buy tome on the same narrow seam of subject matter.  When I put the blog on hold in April 2016 I said my aim was to free up some headspace to write (or rather co-write) a book about financial services marketing.  To my surprise and relief, this has turned out to be true.  The book is written, and at some point in the first half of 2018 it will be published by leading business publishers Wiley.

(I still have to say “at some point” because at the moment we haven’t resolved a bit of a timing nightmare concerning my co-author. leading challenger banker Anthony Thomson.  Being a (or indeed the) leading challenger banker seems to involve a relentless schedule of long-haul travel, interspersed only with the odd day or two every now and then in this country,  We haven’t yet landed (pun intended) on an odd day or two sufficient for the task of squeezing in a book launch, but it looks like some time in May.

Between now and then, my plan is to build up to a crescendo of excitement so that on P-Day both of this blog’s readers are desperate to lay their hands on a copy.  Right now, it’s a low-key start.  I’m not telling you the publication date, or the book’s title or anything about its content, or, perhaps most importantly, providing a link to our Amazon ordering page..  But just you wait.  The momentum will soon start building.