Benjamin Franklin once said, “It takes many good deeds to build a good reputation, and only one bad one to lose it.”
Many financial institutions vary greatly inadvice depending on how a client engages with them, which can create service inconsistencies and reputation problems. Here are some examples:
• A national financial institution offers advisory services to participants of corporate retirement plans. It offers a separate and distinct advisory offering (different risk questionnaires, asset allocation models, and capital market assumptions) to clients of their retail bank branches.
• The trust and brokerage division of a regional bank both offer asset allocation, financial planning and managed accounts, all on separate platforms.
• A major online brokerage firm offers online retirement calculators that use a different methodology from the calculators used by its call center and branch advisors.
This divergence of advisory services hurts firms in at least three ways, in terms of systems and processes,, and credibility:
• First, having multiple systems and processes for doing essentially the same thing is costly. This may have been tolerable when assets and revenues were on the rise. But the reality today is that wealth managers need to become more efficient in their advisory offerings, particularly if they want to serve the mass affluent space.
• Second, this fragmented advice structure is a compliance officer’s nightmare. I do not envy the CCO who needs to explain to an arbitration panel (or even worse, a jury) why the same person would get completely different advice when the only unique factor was the door the client came in through.
• Finally, and most importantly, is credibility with the client. Clients come to wealth mangers for their expertise and advice. Investor confidence will not be bolstered when they figure out that the advice they receive varies not based on their financial circumstances, but on how they came to a firm.
The solution is a common advisory platform with a unified database. Such a platform must be able to be delivered in a variety of ways: direct to the consumer via the internet, to advisors as part of a robust planning application, and via the growing mobile channel. It is only through such a platform that wealth managers will be able to offer their unique value, financial advice, in a manner that is consistent, builds confidence and enhances your reputation with clients.