Transcript

Matt Heine:

Hi, I'm Matt Heine, joint managing director of Netwealth and welcome to Between Meetings. In this podcast series, I chat to industry professionals and thought leaders on what made their career successful and the opportunities and challenges that they see on wide range of topics as they relate to the delivery of advice and financial services. I hope you enjoy their unique insights. In this episode, Julie Littlechild, internationally recognised speaker, author, founder, and CEO of Absolute Engagement shares her research and insight into client engagement. We talked data collection, NPS scoring and the role technology plays in creating a client experience. I hope you enjoy the episode as much as I did.

MH:

Hi, Julie, welcome to the show.

Julie Littlechild:

Thanks so much. Really happy to be here.

MH:

For the benefits of our listeners and also for your benefit, you're calling from just outside of Toronto and it's about 6:30 at night, is that right?

JL:

It is. It's dinner time and it's cold outside so I think that's very different from your experience right now.

MH:

Indeed. I've just had my second coffee, so I'm settling into the day. But thank you for joining us. I'm really looking forward to the chat today.

JL:

Yeah, absolutely.

MH:

Julie, you're a new presence in the Australian market. I thought it'd be great place to start. If you could just give us a bit of background on yourself and why you started your business.

JL:

Yeah. Absolutely. So, I've been working in financial services for 25 years or more. So it's been entirely within the industry that I've worked and we have a really narrow but clear mission. And that is very much to help advisors to get closer to their clients, to uncover opportunities among their existing clients. So really what we do is work with them to gather input and feedback and then, more importantly, to use all of that to really develop a more engaging client experience, to uncover opportunity, to increase referrals. But it all comes down to what are your clients thinking? What do they need right now? And therefore, what do you need to deliver in order to set yourself apart?

MH:

Were you an advisor in your prior life? Or how did you end up doing this particular line of work?

JL:

Yeah. I wasn't, although the greatest compliment I've been paid throughout the years is I thought you were an advisor because I feel that it suggests that we're close enough. I started working with advisors very early on. It was almost a newish industry to work with advisors to help them grow, to help them think about client experience. But I think the one thing that we've always done that has helped me get closer to the market is research. So, we're very evidence-based. Frankly, I'm very evidence-based so I can't separate the two. Never met an Excel spreadsheet I didn't like. So, we've gone out, we've we talk to advisors all the time. We talk to investors all the time. That informs all of the work that we've done. But as a result of that, it feels like we've become really very close both to investors and advisors.

MH:

You currently work with advisors in Canada, the US, the UK, and now Australia.

JL:

Mm-hmm (affirmative).

MH:

Have you found that working with advisors in those different countries has been challenging or are they fundamentally all grappling with the same issues?

JL:

Yeah. I do find the issues really similar. Now, in fairness, if I was dealing with tax or some technical issue, then there would be vast differences. But the reality is the issues associated with working with clients with developing an engaged relationship, with growing those relationships. They're very common even though the regulatory environment is different from country to country. There are differences in how investors behave. Yeah, I do think that the fundamental issues of engagement and growth are really quite similar.

MH:

And what is it when you look across sort of those different markets? If we look at sort of the regulatory environment, maybe before we jump into the engagement piece.

JL:

Yeah.

MH:

How familiar are you with the Australian market?

JL:

Yeah, it's been a market that we've worked with a number of advisors over the years and I've come over and done some presentations and gotten to know the market reasonably well I would say. We're actually partnering with a local firms as well to ensure that we have that full connection, which I think is important in every market that we deal with. But the regulatory environment, it's different. The nuance is different from country to country but at the end of the day it always just seems to come back to the same primary goals of being more transparent, helping investors make better decisions, helping them understand how advisors work. So, there's a lot of similarities across those countries from what we've seen.

MH:

[inaudible 00:05:33] environment over in the Canadian market to UK market changing as often, or perhaps as regularly as Australia, because I think a lot of people are grappling with what's coming down from a regulatory perspective in some of the other things around the client engagement and removing friction become very challenging to actually focus on when there's so much to do on the other side.

JL:

Yeah. I would say that the change has perhaps been bigger in both the UK and the Australian markets and has been to some extent slightly ahead of the North American market. As much as every one of those markets are making similar changes, they're doing it at a different pace. And so, yeah, and it's a distraction in every single market that we deal with. And it's a real distraction, but where we try to focus is more on, in the midst of all that, what experience are you delivering? Is it engaging? Are you setting yourself apart from other advisors? And it's not easy when you have all of this additional distraction, but we just try to stay laser focused on that.

MH:

[inaudible 00:06:47] Decline engagement piece, pre-COVID and post-COVID, has changed quite a lot.

JL:

Mm-hmm (affirmative). Yeah.

MH:

If we think about the pre-COVID world, what were some of the things that you were witnessing the clients were looking for in potentially not being delivered by advisors and equally, what were some of the things that the advisors you work with doing really well?

JL:

At some level I'm tempted to say, some things didn't change at all. They just became more heightened and more important. So, I would argue that the way that we need to add value and the way that we need to engage was the same pre-COVID. The differences are clearly that we have to have more options that we have to do things online that we need more tools and such available, but the fundamentals of understanding your clients at a very deep level, delivering a strong offer, engaging them as part of the review process, getting deep into their lives, all of these things are really quite similar. So, I've seen a lot of advisors for whom the pandemic has just made them more effective, right? It has forced them down the path of making some of these choices, which we're coming anyway, right? We've always had to figure out how to do things online. This isn't new, it's just that now we have no choice.

MH:

And when you say understanding your clients deeper, I think that's an interesting topic to explore a bit deeper. Obviously we need to move beyond risk profile and age-based profiling. What do you encourage your advisors that you work with to consider or to look at when they're profiling or trying to understand their clients at that level?

JL:

So, to some extent, it goes down a couple of paths. One, we work with a lot of advisors who are just trying to get feedback from their clients on how they're doing. And I think it's important, but I don't know if it's the most important thing right now. I think of client input is more important. So, how are they feeling right now? Are they feeling secure? Are they feeling confident? Are they feeling in control? Do they feel they have a clear plan? In fact, those four elements comprise a client self confidence index that we created because we saw such a connection between how clients are feeling their own sense of self confidence about the future and things like their level of satisfaction with their advisor. They were really quite closely connected.

JL:

So, I think just really peeling back the onion and trying to get a little deeper than the surface on where they're challenged, what they're really concerned about and especially now, have their values shifted? Have they changed how they think about their financial future? Are there different things that they want to do? I know for me and for a lot of people I know this has caused us to reevaluate. So I think just if advisors can go a little deeper on some of those elements, have deeper conversations on those things that might feel a little outside where they're supposed to be focusing or where they usually focus that it's going to be to the benefit of clients. So, I think that's definitely one path to go down, uncovering unmet needs, right? We're talking to a lot of investors who are saying, "I'm thinking more about insurance. I'm thinking more about legacy, about estate, about..." Again, the kinds of things that might have become important over the last year or so. So, again, trying to get a little beneath the surface to understand what some of those needs really are for clients.

MH:

[inaudible 00:10:44] and then you would pause setting up a new business. They sort of things can be built into that upfront process. And it sort of becomes part of how you work. If you're an existing practice suddenly wanting to pivot and start having these deep and meaningful conversations and collect a lot of data almost in real time. How do you go about that? Where do people start?

JL:

Yeah. Well, I mean, there's two parts to that. I mean, there's the practical answer, which I can talk about, which is how do you actually get that data but there's also a soft skill side that I think we sometimes brush over. For a lot of advisors that I've talked to over the last little while, they've suggested they want to have a different kind of conversation, but they find they're just holding back. They need a little insight or support and feeling comfortable with having a different conversation. It's like working a different muscle. And so I only say that because I think we need to acknowledge that that can be a challenge, but in terms of making that a little more comfortable, certainly the way that we go about it with advisors is just having a methodology in place to gather that kind of input.

JL:

So it could be doing a client survey that asks clients a set of questions and unearths some of those needs and some of those concerns and challenges. It could be having a process whereby in advance of a meeting with a client, you're just asking them for their input on a few key points so that you can, again, take that into the conversation, understand, in the moment, how are they feeling right now and having that conversation. I guess what I've observed is that if the conversation starts by inviting that kind of input, it's more comfortable for the advisor because that means you don't need to sit down cold and say, "Well, let's talk about how financially secure you feel." I mean, it feels awkward at best but if you can go into a meeting having gathered that in advance then that becomes a prelude to a deeper conversation. It feels more natural at that point.

MH:

Based on frequency, which you believe you should be collecting that feedback. So I know with our staff, for example, we do a pulse survey just to get a bit of a temperature check.

JL:

Okay, yup.

MH:

Is that something that you would recommend advisors consider with their own client base?

JL:

Yeah, I think it depends very much on the objective. There's a lot of different types of input you can gather, right? So if I think about traditional feedback, are they satisfied or a net promoter score or some sort of these overall metrics, probably in reality, I think every 12 to 18 months is absolutely fine. It doesn't change that much. What I'm much more actually focused on and interested in is rather than it being a point in time, how do you get more ongoing input from your clients? So that's why I mentioned in advance over review. That's an important time to know how they're feeling so that you're consistently getting input as people are coming in to meet with you. Absent of that, I do like the idea of being able to go out quarterly or monthly and just get more of a pulse because let's face it a lot changes in a year. We've just learned that more than we ever have. So, we can't assume that if we were doing a survey every three years that we've got all the information we need. Things change much faster than that.

MH:

NPS surveys are always fairly controversial. Do you have a view on the whether they're effective or not?

JL:

I do.

MH:

I thought you might.

 

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JL:

It depends on... So, well, I'm Canadian. So we always fall in the middle of everything anyway, keeps us out of arguments with everyone. So here's when I think it can be effective. First of all, it's an interesting measure over time. So if you ask an NPS question, how likely are you to refer in the next 12 months? Or what have you... If that is changing dramatically from one quarter to the next or one year to the next, it's a symptom of something. It's not a diagnosis, right? Because you don't know what that means, but it is a symptom that something else is going on.

JL:

The challenge that I have with NPS is that it gets misinterpreted so broadly. So, I've seen people look at an NPS score and get terribly upset by the fact that there are some detractors. And I've actually dug in and asked detractors, why they rated as they did. And often it has nothing to do with dissatisfaction. It might be, I just don't refer or I don't know, how am I supposed to know if I'm going to refer in the next 12 months? Right? So, look, there's pros and cons with all of these things. I just think you're better to have something in place. So, at least you've got some good data coming in.

MH:

So, Julia, a lot of the things that you've just talked about sound like the foundations of goals-based or value-based advice. Is this something that's becoming increasingly the norm in the UK, in the US or is it still in its infancy is like in Australia?

JL:

I would say it's on its way to becoming more the norm but we certainly see just such a broad range of different models in place. I think that the conversation largely across, certainly in North American, in fairness, probably most places I've been is just what do we need to do differently to ensure that we don't become a commodity, that we're truly differentiated, the clients understand that value. And a lot of these kinds of conversation and planning and a shift toward wealth management. I think is a part of that.

MH:

And through your research, what have you found is the most important things to clients at the moment?

JL:

Let's make it really overarching statement because there are things that we find but what I found most interesting when we look at the data this year is that how fluid emotions and needs and concerns have become. And to me, that was almost more interesting than what was of interest. The last time we went out and did investor research, we were in field for two weeks. And we started looking at differences between clients who responded in the first couple of days compared to the last, and this was in March of last year. We're just gearing up for our next round. And it was wild how different the responses were in. And that alone made me think about how important it is that we keep that direct connection to clients and really don't assume what they're going through. Don't assume what their experience and have those deeper conversations.

JL:

We could break that down into a lot of different areas. What are they expecting? There's sort of what we think of as core client experience issues. So things like how frequently are you meeting? How are you meeting? Are you connecting in other ways? We're certainly seeing an increase in demand for more frequent contact right now. We're also seeing a generational shift on that. So, younger investors saying that they actually want more contact. At the same time, they're more likely to say a virtual meeting is fine, so it's more efficient in a way. So I would say that certainly over the last year, and generally we're seeing this shift toward more frequent contact and some of it should be fairly obvious to most of us. We're seeing a shift toward more online tools, more self-service, but I think that's just technology growing up, frankly.

JL:

I would say that we've seen a lot of interest in non-financial topics in a way. We've seen clients saying I'm interested in, how do I help my kids make better financial decisions, caring for ageing parents, sort of issues that are tangential to our financial lives but important, nonetheless, I think. So for advisors who were thinking about how do I stand out, how do I make a difference, then I think understanding all of that is important.

JL:

We're seeing trends also that are impacting the way that advisors communicate. Most noteworthy, I think at least from a client experience point of view is a shift toward communications that are more personalised, right? Sort of gone are the days of just generic communications going out to all clients on things we hope they'll find of interest, more focus on personalised communications that clients have said I'm interested in a particular topic. And that's the kind of thing you focus on. We're seeing more aspirational content, if you will. So, the advisors sharing content or running events that are more helping clients to think about who they want to become more than just their investment. So again, there's a broadening of what the offer is, which is provocative for a lot of people to think about, but it's a trend, nonetheless.

MH:

This is a huge amount in all of those statements. And I guess if we look at number of the past, the technology aspect, which we might come back to, because it's something that's dear to my heart.

JL:

Yup.

MH:

But as far as segmentation, do you have a sort of a typical segmentation model that you use with your clients to help them understand who should be receiving this aspirational content versus those that are looking for more factual or fact-based information? How do you typically segment?

JL:

When I think about segmentation, I think about it at two levels. So first of all, I think of segmentation based on the value of the client relationship which should drive the scope of the contact. So kind of an ABC client that sort of segmentation. I think that should dictate things like the frequency of contact, the scope of the services provided, but then there's another level. So once I've got that defined, because ultimately that's about profitability. Once I've got that defined, it's more about how do we now do more psychographic kind of segmentation so that we can understand what people are really interested in. And it can be interests. I've seen advisors do hobbies.

JL:

I tend to like to have segmentation that is, again, a little fluid. It's more, what are they interested in right now? That might change next year, it might change next month, but being able to truly personalise based on what clients say is of interest to me. I think that creates a different connection if you think about it. If I tell you I'm very focused on health at the moment, and all of a sudden, I get an article on that. It tells me that you listened, it tells me that you cared. And so I think that's another level of segmentation that it's becoming increasingly.

MH:

All of these things are hard though. And you mentioned before that it's really technology growing up and mostly I agree with you.

JL:

Yeah.

MH:

The implementation I think is quite different than we're seeing. If the intention in this industry over five years and we run regular research has been to adopt a more digital experience to augment the face-to-face, but it's many years behind and now it's become a must have rather than nice to have through COVID.

JL:

Mm-hmm (affirmative).

MH:

What are some of the interesting ways that you're seeing advisors use technology and data to deliver on that promise?

JL:

Well, I mean, I think the biggest conversation over this past year is how do I deliver a virtual meeting, right? I mean, we're dealing with some pretty fundamental issues. I think that the vast majority, if not every advisor has figured out to some extent how to do that, again, they didn't have a choice. But I have to wonder if it's a different question now. It's not just, am I able to have a meeting by Zoom or Teams or what have you, it's what does an extraordinary virtual meeting now look like? And so, we're seeing some advisers embracing more engaging tools if we're meeting online. So, it could be a mural or a mural where I've got sticky notes that I can move around, or I'm using a mind mapping software, or we're doing scenario analysis real time.

JL:

I think a lot of that is going to be the future of how to make these meetings more effective. So, I think a lot of technology being used there that tends to be where we focus. I mean, there are people far more knowledgeable than I to talk about all of the technology, but what we see is that kind of thing. And also marketing technology, I think is a big area of focus. So that could be something as simple as an email distribution system, a Mailchimp, a Constant Contact, a HubSpot, there's a long list. I do think that increasingly advisors are embracing some of these things so that they can communicate more effectively. You don't need to be a tech whiz to figure some of these out, although it feels that way usually when you start.

MH:

I don't think that's a great point. Your virtual meetings are going to have a place in the future, and it could be that more ad hoc, regular check-in as opposed to the annual review.

JL:

Yeah.

MH:

But I think as you said, making it an extraordinary virtual meeting rather than face-to-face...

JL:

Yeah.

MH:

... is a really interesting concept and those two systems mural and...

JL:

So we just happen to be using one called Miro. It's M-I-R-O and it's to map out client journeys and things, but it's more the idea of that kind of tool where it's visual and I think that's largely engaging. I mean, besides all of the basic skills that we've had to learn, like looking at a camera and figuring out what's behind you when you're having a meeting and all that kind of stuff which has been a wonderful learning curve for us all.

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MH:

And just don't technology. ROBO is always a hot topic, again, in its infancy hasn't really had traction in Australia, but a huge of your side of the world. How are advisors embracing ROBO services or do they still see it as a threat?

JL:

I think there's a movement toward more of embracing it. So initially it was definitely seen as a threat. And in fairness, some of the firms are a threat. They're positioning themselves as an alternative to working with an advisor, but there were a number of firms that I think took a very different approach and, and said, "We're to be used by advisors. We are a way of automating relationships that are smaller relationships." And, to me, that makes an enormous amount of sense. To me, that's just efficiency, right? How do you have perhaps a more segmented offer within your business, have a more streamlined offer for your smaller clients or the children of your clients?

JL:

I think we finally are getting our head around the fact that that's not a threat at all. It's just another tool that can be used. So I've talked to a number of advisory firms who are saying, "We want to focus our time on our larger clients," and that's where their needs are more sophisticated. They need our advice, they're complex, but they'll have an offer for their kids that keeps the relationship and holds them close, but still offers them some solutions.

MH:

Is intergenerational planning something that the industry is focusing on at the moment?

JL:

Huge. I mean, I don't think a day goes by where I don't have a conversation about this. And what interests me is almost everyone acknowledges that it's important. I mean, it would be hard to argue it wasn't, but there's such a variety in terms of how advisors are addressing this. And increasingly I do think that if we can acknowledge that working with the children of our clients isn't necessarily an asset retention strategy, but it can be an engagement strategy. I, as a parent, want to know that my son is taken care of, and if my advisor can help me help him, then I'm going to refer. I'm going to talk about that. It's going to help. And let's face it, this is more of a high net worth issue, right? I mean, I think that's really that segment of the market where it's more important. But we are seeing increasingly advisors holding family meetings, having intentional communications, plans with the children, really making it part of their core offer.

MH:

And when they have that sort of situation where they're expanding beyond, I guess, the traditional investment services, how are advisors charging? Is it moved away from a percentage-based fee, project-based fee? What's sort of the norm now?

JL:

Oh, it's everywhere. I mean, I don't think the traditional model has changed that much. There's a lot of talk about it, but I frankly don't see that many people who've moved away from it. When I've talked to firms that are truly trying to do things that are non-traditional it's often, and this is rare, frankly, but some of the larger firms that we work with are veering into areas that are outside financial services and like health and wellness. You hear about some of these trends a lot, but they're not trying to become that expert. They're simply saying we can facilitate access to experts in that field, but it's becoming kind of part of their offer in a way. The only trend that I think we're seeing increasingly, and I don't know how this will play out on that.

JL:

I imagine it's the same here is for younger clients, the ability to perhaps have almost like a subscription-based model instead of asset-based. I will say though that I've talked to a couple of advisors that I consider to be really quite progressive and it's so provocative for some people, but they're finally saying, "I don't think assets is how we should be getting paid," right? Because it's not necessarily a reflection of the actual work we do. And we need to have the courage to go out there and actually charge people for the work that we're doing. I don't see anybody jumping in line to follow it yet but it's being talked about that's for sure.

MH:

When you get to Australia, you'll definitely see a lot more of that. It's pretty much the whole industry is heading. So, yeah.

JL:

Yeah. I mean, it makes a lot of sense, right? But, look, it's easier not to do it. So, I think a lot of people have just stuck to that.

MH:

Absolutely. Julie, I'm conscious that it's now getting very late for you in the evening. Thank you for your time today. You do a podcast, you've written a book, you've got lots of ongoing research. How do listeners find out more about the fantastic work that you're doing?

JL:

So, absoluteengagement.com and you'll find our blog there, which is the place where we try to share all of the research. I think it's the easiest place to find everything that we're up to.

MH:

Excellent. And not withstanding, we've still got a fair bit to work through with COVID. When do we see you in Australia next? Is that 12, 18 months?

JL:

Oh, gosh. I hope so. Wouldn't that be nice? I would love to. Now that we're really getting deeper into the market to come over and spend a little time there, so fingers crossed.

MH:

Look forward to meeting you in person soon. Thanks for your time.

JL:

Indeed. Thank you.

 

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Views expressed are of the interviewee and may not be the opinion of Netwealth or its related companies.