Industry Perspective: Why Canadian financial services firms need to adapt to grow the customer base

Sarah Kim
Director of Solutions Consulting, Ideaca Knowledge Services

For many of today’s financial advisors and wealth managers, the current economic and subsequent regulatory climate has dramatically altered the relationship they once had with clients. Client segmentation is becoming more pronounced: clients are feeling cautious and are much more critical of advice and products.

And as the roles and relationships between institutions and customers continue to evolve, Canadian firms are looking to position themselves as trusted financial advisors within an increasingly competitive industry.

Sarah Kim is the director of Solutions Consulting for Ideaca, a Canadian management consulting firm, with offices in Toronto, Vancouver, Calgary and Edmonton. The company offers a Financial Advisor Dashboard solution that integrates closely with Microsoft Dynamics CRM, SQL Server and SharePoint 2010 to help financial services firms increase revenue from fee-based business by gaining a unique and differentiated understanding of clients.

Perspectivesspoke with Kim to learn more about how being seen as a trusted financial advisor can help Canadian financial services firms deliver greater value while developing a loyal and profitable client base.

Q: From a Canadian perspective, is there anything that our financial services firms should be doing differently compared to the global market?

A: Canadian financial services firms often struggle to leverage the investments that they've already made. They're sitting on large volumes of siloed data and IT investments that have grown and matured significantly over the past 10 years. That said, these firms should look at leveraging these vast amounts of data to empower their people – from front-line salespeople, to branch and regional managers, all the way up to C-level executives who provide strategic direction. This is a competitive advantage that cannot easily be copied by competitors, versus new products and services that can easily be replicated by others.

Q: By and large, are financial services institutions prepared for this new transactional model?

A: There's been a pretty strong push for companies, who have obviously been the most severely burned by transaction-based revenue models, to go back to the more traditional fee-based business. In order to do so, they need to implement business processes, tools and operational controls that enable and support the business. They also need to maintain a long-term-gain view with their customers. For example, we’ve worked with financial services clients to develop tools that provide their salespeople with improved visibility on their impact to the bottom line, through a more standardized approach to charging fees. Again, it's about putting vast amounts of data in the hands of every day decision-makers, and doing it in a way that is meaningful and insightful. In addition to financial and operational controls, continue to build analytical structures for our clients to help them better understand client demographics and segments, so that they can more competitively price products and services, and react quickly to market changes.

Q: How do economic and regulatory considerations factor into financial firms making this shift?

A: Leading firms are using their best people to re-focus on customers. Now is the time for a lot of these organizations to regroup, rebuild and reform those relationships with their clients. This includes focusing on flight-risk clients with flight-risk, and building out client households in both the traditional and non-traditional sense. This is especially true with generation Y prospects, from which traditional definitions and methods of relationship building no longer hold. Also, within our current economic climate, despite the large and real challenges, there is an opportunity for organizations to begin asking questions and taking a step back to recalibrate their tools as well as retain and prepare their best salespeople. Take our Advisor Dashboard for example. These types of analytical tools not only help sell the right product, to the right people, at the right price. It's also an opportunity to train front-line sales to better understand client information, to mine and analyze client data and facilitate more meaningful interactions with their clients.

Q: What’s the ultimate measure of success for today’s Financial Advisor and Wealth Managers?

A: Ultimately it's a long-view game. By laying out a firm foundation that enables your Financial Advisors and sales teams to act quickly in the clients’ best interest, a win-win scenario evolves with the shared success of advisor and client. As for higher-level organizational benefits, these tools help Financial Advisors and Wealth Management firms become stronger, more self-sufficient and better able to buffer economic ups and downs.