Customer experience: Bringing new value to old-fashioned service

Superior, personalized customer service is nothing new. It’s inherent to any consumer transaction, and even more so when it comes to working with people’s personal finances. But the definition of what superior and personalized service is is changing. In today’s digital world, consumers have more information, and thus more choices than ever before.

With advances in digital marketing, bots, and targeted ads, the online experience has become more personalized than ever, and all without any sort of human interaction. Nowadays, a customer looking to buy a new electronic device might start by asking for advice for friends, then move online to research and compare products, and might go into a physical store to get the “hands-on” experience. But when it comes time to actually make a purchase, a growing number of consumers are turning to the mobile channel.

The Internet Retailer 2016 Mobile 500 Guide reports that mobile sales were 29.7% of all North American e-commerce sales in 2015, up from 24.6% in 2014. And according to KPMG’s Mobile Banking 2015 report, mobile is already the largest banking channel by transaction volume among North American financial institutions. As a result, personal relationships may be suffering.

The downside of digital: spam

With the sheer amount of digital data and information available, consumers are able to be make more decisions independently. In order to keep up, many business giants have jumped into the digital fray. Digital communication is easy to mass-market, and companies are able to reach more customers than ever before. But there’s a flip side to mass communication: customers are already inundated with so much digital advice, they’ve become extra wary of what appears to be spam.

In a study in The Economist, “Mind the Digital Marketing Gap,” research showed that 70% of consumers are jaded by what they consider to be superficial efforts at personalization. And 63% say they’ve grown numb to efforts that mostly mostly just insert their names into generic messages.

Customers can tell when they are the target of mass, untargeted communications. When customers feel like just a number, going digital is actually working against that feeling of personalization. With regards to the financial industry, it can feel like their advisor doesn’t know them at all. A Digital Banking Report called “The Power of Personalization in Banking” cites a study by Personetics which says only 31% of customers feel their banks know them and their financial needs well. And a whopping 28% believe their institutions put their interests before those of their customers.

Digitization is a powerful tool for financial institutions, but only if used properly.

So how to go digital without alienating customers?

Going digital is both necessary and helpful for financial institutions. As technology continues to advance and customer mindsets change along with it, those in the financial sector will have to change with the times or be left behind.

Digitization has revolutionized the speed, scale, and style of communications. Not to mention it has the ability to streamline your workflow and increase productivity. But to avoid alienating customers, it’s best to combine new technology with old-fashioned customer service.

Sending messages targeted to address needs actually felt by the customer are generally very successful.

Customers want personalized services. They want to feel connected to their financial advisor. It’s about finding the fine line between feeling more connected and feeling spammed with impersonal communications. Done properly, digitization can help close the customer experience gap and stay at the forefront of customers minds.

What keeps you up at night, Mike?

I’m always thinking about our company  –  at dinner with friends, on the commute home and even outside in the middle of the wilderness. I wake up in the morning with new ideas and I am constantly reminded that we cannot pursue all of our ideas, so I have to write them down and then keep them on the back burner for later. As an entrepreneur, I’m constantly processing what needs to get done that day or that week.

I had never really tried to articulate exactly what was keeping me up at night, I just knew that there were lots of things I was constantly going over in my head, whether i was consciously aware of it or not.

I recently met with a well respected entrepreneur and investor in Montreal and he asked me what kept me up at night. It was a great question, and quite a different experience being asked in person versus reading articles written by other entrepreneurs about the subject.

Ironically I spent most of that night staring at the ceiling thinking about that question, thinking about my journey as an entrepreneur to-date and how our team has evolved.

His question helped to center a lot of my thoughts on important things in the company that were being executed or conceptualized on a daily or weekly basis. Before, they were just things that needed to get done, so they got done.

We can’t always be treading water as entrepreneurs – we need to take some time in our day to reflect and to increase our awareness of the present while considering how we’re going to accomplish a long term vision.

What’s interesting is how the things that seem important or challenging at the beginning become the subsequent building blocks that are incorporated as part of your day-to-day routine. What used to be considered stressful is now something habitual. It doesn’t get any easier, you just get better.

And I think part of the problem is getting into the state of mind where you are “thinking fast and thinking slow”. We have the tendency to think fast too much of the time due to the sheer volume of tasks that we need to get done. But operating like that leaves no “down time”.

We need to make it an intentional process to stop and consider how our team’s collective energy is being used throughout the week and whether every member’s effort is being aligned towards a common goal. We need a birds-eye view of long-term goals, with a zoomed in view of the day to day tasks that will get us there. We need to be mindful of what is keeping us up at night.


-Mike Blicker, founder of WealthTab


Bridging the customer experience gap

The financial industry is feeling the effects of digital disruption. New personal technology like smartphones, tablets, and wearable tech combined with the advent of fintechs, robo-advisors, and the digitization of many traditionally paper processes has changed customer expectations. Many in the financial industry are struggling to keep up, and are increasingly finding themselves falling into the “Customer Experience Gap” (CEG).

Customer experience is increasingly the metric that is setting businesses apart. A Gartner study revealed that by 2016, 89% of companies will compete mainly on the customer experience they provide. It’s now 2017, and according to Salesforce, only 30% of marketers say that customer satisfaction is one of their key metrics.

But customer experience is precisely what financial professionals should be focusing on. They may lack the deep pockets of big banks or funded fintech startups, but they do tend to know their clients better than larger competitors. This knowledge, when combined with an openness to digitization, can create the capacity to climb out of the gap.

In “The Digital Tipping Point”, CEB (now owned by Gartner) discusses the implications of reaching such a point. Leading retail banking executives predict that by 2019 banks will need to make roughly half of all sales using digital capability that does not exist today. While consumers are already likely primed for this adjustment, it is the financial institutions that are lagging behind.

Consumers are already continuously connected to a vast array of resources they use to manage their lives. In the article, CEB points out that just three years ago, over ⅓ of consumers preferred to bank via personal channels. By 2016 that number had dropped to less than 20% with nearly a quarter wanting to do their banking exclusively via digital channels. The rest (58%) also preferred digitized services but still saw value in have access to a human employee when they needed it.

It used to be that consumers would consolidate business for ease of banking at a single location. But today’s networked consumer can have a similar one-stop-shop experience by stitching together best-in-breed solutions for every need by managing multiple providers on a single device. The result? Digital consumers are 60% less likely to consolidate all of their products at a single institution than non-digital consumers.

People used to shop for financial products when they had a life event, but now consumers learn about product needs while engaged in “constant goal seeking”, while exploring the digital network they have built for themselves. So someone might come across an ad for the perfect mortgage while browsing Zillow. Or maybe while shopping for a new car online a great finance deal pops up, accompanied by an ad for an easy to use digital loan process. Customers are now making major financial and life decisions without their financial institution even knowing they had a need.To bridge the Customer Experience Gap, it’s necessary to ensure customers know those same great digital experiences are available from their financial institution.

According to CEB analysts, the vast majority of consumers now take digital convenience and access for granted. They do, however, continue to value financial institutions that understand their needs, respond with relevant information, and help them stay on track with their financial goals. By building out a digital infrastructure and transforming routine customer interactions into extraordinary customer experiences, it’s easy to start bridging the gap.

Relationship building: it starts with client onboarding

Any financial advisor can attest to the fact that slow and complex customer onboarding is a problem. For many advisors, the onboarding process means lots of paperwork, lots of worry about compliance, and is unnecessarily long and difficult.

Because of this, most advisors tend to view client onboarding as a hassle rather than an opportunity. In the wake of a focus on growth, client onboarding becomes an afterthought rather than a relationship-building opportunity. It can be tempting to turn to the next potential client rather than focus on creating a lasting impression with new clients.

First impressions count

The client onboarding process is the starting point for the entire business relationship.

While it may not seem worthwhile, it’s important to remember that first impressions are lasting, and they begin with the client onboarding process. Failing to take advantage of that first face-to-face interaction is a missed opportunity that can hurt the client relationship before it’s even had a chance to get started.

Client onboarding is also an essential opportunity for advisors to uncover client needs, right from the get-go. Understanding the unique challenges and demands of a new client lays the foundation for a continuing successful relationship down the line.

Take advantage of technology

Onboarding software can be used to automatically guide the account opening process and bring it online, while enabling your advisory workforce to go mobile. Taking advantage of available technology to streamline the process and go paperless means more opportunity and time to focus on the personalized side of client interaction.

The application of this technology makes it possible to meet clients anywhere and open accounts faster and more accurately than ever before. And with paperwork out of the way, there’s time for real conversations with clients. These conversations are key to uncovering the key cross sell and upsell opportunities that are so critical to address in the first 90 days of the relationship.

A personalized touch

A little bit of effort goes a long way in distinguishing yourself from competitors. To ensure every client feels valued, consider providing a personalized welcome package to demonstrate appreciation and understanding of the new clients’ business and establish a commitment to service.

Follow up an exceptional account opening experience with a series of personal touch points during the first year of the client lifecycle. Recent studies suggest that most clients prefer a scheduled meeting with their primary wealth management advisor at least quarterly. These check-ins are an opportunity to deepen relationships and help clients select products and services that address their changing needs. Leveraging wants and needs identified during onboarding can help guide these conversations.

Client onboarding forms the base for all future client interactions. Taking advantage of technology that can help simplify and expedite the onboarding process means even more time to focus on the personalized aspect of client interactions, ensuring you put your best foot forward from the very first interaction and build a relationship that will thrive for years to come.

Beyond the robo-advisor hype: the battle for the customer and how financial institutions are responding

Robo-advisors like Betterment and Wealthfront made waves within the financial community over the past few years with their automated portfolio rebalancing, modern user interfaces and lower management fees.

Then something interesting happened:

Big banks and large wealth management firms responded by offering their own robo-advisor technology to their clients or announced intentions to develop them.

In true start-up fashion, Betterment expanded its’ product base, offering its’ services to financial professionals. Vanguard and Charles Schwab responded by offering robo-advisory services to their network of investment professionals and were able to quickly capture more assets under management than Betterment and Wealthfront.

In Canada, we’re starting to see the same trends in robo-advisor adoption.

Companies like Wealthsimple and Nest Wealth built low-fee robo-advisor solutions and attracted interest from millennials. Interestingly, Wealthsimple followed in Betterment’s foot steps by first positioning as a direct-to-consumer robo-advisor and expanded its service offerings in recent months to financial professionals.

So Why the Big Interest in Offering Robo-Advisory Services?

Robo-Advisors are filling an Investment Advice Gap.

They offer web and mobile based platform to give clients easy access to a diversified investment portfolio. These services are being marketed as a cheaper and more accessible alternative to traditional financial advisors, based on the low investment minimums and lower fees (typically between 0.15% to 0.40% on total assets under management).

For millennial audiences, this type of technology makes sense because their investment goals are not-as-of-yet specific so it’s possible to offer them a One-size-fits-all solutions by varying the asset allocation percentage as a function of their risk profile.

The business model sounds attractive on the surface until you do some analysis:

According to Michael Wong from Morningstar, Robo-advisors need between $16 Billion and $40 Billion in Assets Under Management to break even based on the lower fees they are charging clients and the average account sizes of their clients (1). Betterment with an average of $28,000 USD (2). Assuming an average fee of 0.25% per annum, that’s $70 earned per client. And now there’s industry research that it can take between $300 to $1000 to acquire a new client (4).

Some firms like SigFig and Hedgeable are claiming that they spend $0 in marketing but this itself is misleading as firms are spending money on value added services at no cost to clients so these development costs are attributable to customer acquisition costs.

The challenges of scaling to profitability are also compounded by being able to retain these clients long enough for the life time value of the customer to be higher than the acquisition cost. So if it’s taking me $500 to acquire that customer, I need to keep them for 5–7 years in order to recoup my cost.

As the competition for assets within the automated direct-to-consumer robo-advisory space intensifies, the clear winners will be the larger institutions because they are better positioned to distribute their products to their current customers and to provide human advice when needed.

Retail banking and fintech

Over the past few years, fintech companies have transformed the way that people engage with Financial Services. Leveraging existing banking networks or relying on external third-party systems, fintech providers have been able to deliver the same services that banks do, including commercial loans, holistic financial advice and investment advice. They are doing one thing particularly well when compared to their traditional counterparts: they are building better client experiences.

The retail banking experience:

Customers have higher expectations than ever before from their financial services providers.

Clients want custom tailored solutions to fit their needs. The most obvious example of this is within payments and we only need to look to the e-commerce space to see that this market is dominated by alternative payment mechanisms like Paypal, Braintree or Stripe. Customer-facing retail stores like Starbucks have similarly followed suit, offering their clients seamless Point of Sale solutions.

Millennials are the biggest early adopters of mobile banking and mobile money management applications. Many early stage fintech companies have recognized this and are building mobile-first applications: Acorns (investments), Osper (prepaid debit) and Robinhood (trading) and Venmo (social payments) to name a few.

So how does this affect the retail banking landscape?

These technologies are putting pressure on banks to automate their business processes and reduce their headcount. In the retail banking environment, Citi Bank projected that it anticipates as much as a 30% reduction in headcount from 2015 to 2025 (1). While this implies a significant number of job losses over the coming years, the main takeaway will be that retail banking will shift towards mobile distribution as the primary means of interaction between the customer and the bank.

In fact, close to 38% of millennials have not visited their retail bank branch within the past year (2). More startling still, 71% of retail banking customers consider their relationship with their bank to be transactional rather than relationship-driven (2). In other words, millennial clients are starting to place greater emphasis on the services being delivered and how they are delivered rather than who is delivering them.

The implications for this are extremely important going forward for Financial Services as these technologies may lead to lost revenue (lower fees, fewer in-house transactions), loss of brand relevance (app dominated) and loss of customer relationships (fewer interactions with clients).

Nearly all banking executives agree that the industry is moving towards a digital banking ecosystem, but the major problem to digital adoption is scaling in accordance with their legacy systems and regulatory constraints (3). Legacy IT banking systems are preventing banks from adapting quickly to new demands from clients and from regulators. Banks must start building new scalable systems to respond to rapidly changing consumer expectations.

The key to customer retention in the long term for banks will be maintaining relationships with their clients.

Cyborgs, not robo-advisors, are the way of the future

There’s been a lot of hype around robo-advisors in the past few years. Companies like Wealthsimple and Betterment have been gaining traction, and a sector of the population traditionally ignored by the financial advising industry is being singled out and targeted for the first time: millennials.

But there’s no need to feel threatened by these robotic counterparts; despite the publicity, the capabilities of robo-advisors leave a lot to be desired. While they are useful for low-involvement, low-risk long-term investments (which is perfect for millennials at the start of their investing career), robo-advisors are narrowly constrained to portfolio solutions where mathematics and algorithms function well. The problem is, they can’t address a client’s full financial picture.

The technology behind robo-advisors can very useful for completing many of the more granular tasks that make up your day-to-day routine (such as automated portfolio rebalancing and online reporting), and if implemented correctly can help you be more efficient. Robo-advisors will never be able to replace the expertise and personal touch of a human advisor with years of experience. Predictive data algorithms can make a scientifically-based guess, but the market is reflective of the volatility and imperfections of the humans that govern it. Embracing automation and combining the best of both worlds makes for a new type of super-advisor: the cyborg.

Rise of the robo-advisor

Adopting the tools of modern portfolio theory, the robo-advisors of recent years have built algorithms to construct optimized efficient-frontier portfolios for their investors. In addition to providing portfolio-building advice, they have developed a range of other valuable add-ons in their various iterations including: efficient asset location, automated rebalancing, and ongoing tax loss harvesting.

While robo-advisors do manage to leverage technology for some undeniable advantages, it’s important to note their limitations. They are chiefly suited for managing long-term stable investments like ETF portfolios, something that can be offered for significantly lower fees than a human advisor. Their “one-size-fits-all” mentality and formula is well-suited for the type of millennial consumer they are aimed at: someone with little to no knowledge of financial planning that otherwise probably wouldn’t be investing at all. But while these companies are banking on the potential future profitability of these young clients, they tend to not be very profitable today. The average client balance at Betterment is $28,000, and no minimum balance is required. The average account size at more established traditional firms is much higher; Charles Schwab, who started offering robo-advising services to their clients in 2015, has an average size of $80,000 for those accounts.

Indeed, robo-advisors are a nice fit for nearly everyone falling into that category. They are a good jumping-off point for those at the beginning of their career, people who are considering long-term investment for the first time and have relatively simple portfolios and goals. But the target audience of all this robo-hype has little crossover with the usual clientele of traditional financial advisors. The technology simply isn’t up to the task of handling diversified portfolios of stocks, bonds, segregated funds, options, futures contracts – the list goes on – and the subtleties of larger-scale investment plans.

Human advisors for human clients

When it comes to comprehensive financial advice on a more intricate and expansive scale, the problem is not one of information – if anything there is an overload of information readily available. Rather, it is a behavioural problem. How to sift through all the data and filter out the irrelevant information? And behavioural problems are uniquely suited to human-to-human interaction, not interaction with a machine.

Having a human advisor, and thus human interaction, is much more likely to hold someone accountable. With the proliferation of knowledge published on the internet and seemingly never-ending well-meaning ‘how-to’s’ and listicles, investors today are not faced with problems of information or technology-scaled execution. The modern day investor is already bombarded by a veritable deluge of email reminders, newsletters, and account statements. The modern day investor still needs human advice.

Cyborgs are the way of the future

While technology can help simplify and automate many mundane day-to-day tasks it can never replace the expertise of a human advisor. Incorporating things like automated client onboarding leaves time to interact with clients in a meaningful way. Digitization of paperwork-heavy processes makes your life easier and improves client satisfaction.

Leveraging technology to increase transparency with clients also makes for a more meaningful relationship; it’s easier than ever to generate visual reporting and send it straight to clients’ inboxes, keeping them in the loop every step of the way. The solution is not technology or advisor, it’s technology and advisor.

Welcome to our fintech journey!

Hi, I’m Mike. I’m a former investment analyst and equity trader who loves rock climbing and the outdoors. I’m also the founder of WealthTab.

I left finance to set off on my fintech journey on a nondescript winter day two years ago. I saw an opportunity to fill a gap in the financial sector by building a meaningful B2C product, and became an entrepreneur.

While my office isn’t papered with charts and filled with monitors anymore, reading up on market trends, understanding price action, trading on long term stock fundamentals while observing the short term technicals are all things that I still enjoy doing. It’s what I’m passionate about and it’s why I want to help enhance the advisor/client relationship model.

After teaming up with a co-founder, we started Wealthtab in 2015 with a clear vision: to deliver a more intuitive and transparent experience to financial professionals and their clients. Although we’ve made a few pivots based on the market research we’ve conducted, and are now a B2B product, that vision has remained the same.

The problems I saw as a financial professional are problems I continue to see today. Advisors are overloaded with information and clients are playing catch up trying to understand the nuances of stock movements within their investment portfolios.

Another huge problem for professionals is the difficulty in coping with paper-first processes. The sheer amount of physical paperwork is constraining their workflow reporting internally within their organization and reporting externally to regulators like the OSC and AMF.

Client experiences are suffering. What keeps clients loyal at the end of the day is a good advisor relationship. That means clear communication, personalized service, and transparency. It’s a delicate balance; you can’t buy customer loyalty no matter how many tech dollars you throw at the problem, but doing everything manually leaves less time for meaningful human interaction.

In this blog, you can expect to find relevant information about the current state of the industry, the digitization of many standard processes, and how technology and good-old-fashioned human connection can work together to enhance the investment experience from both a professional and client perspective.

We’ll have informational pieces, how-to’s, industry updates, and some posts from my perspective both as a former financial professional and current fintech founder.

Times are changing, and the financial sector will have to evolve to keep up. But with the right blend of knowledge, technology, and personalized service, those changes will all be for the better.

– Mike Blicker, founder of WealthTab