Different strokes for different folk
As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.
We now consider the third action identified, which is that a “one size fits all” offering won’t meet the needs of many of your clients, or indeed of your business itself. It is likely that Financial Brokers will need to have different service propositions or service packages for different groups of clients. Higher value clients will expect a premium level of service and engagement, which will entail more time and cost inputs from the Financial Broker. At the same time, it will not be viable to deliver this premium service in a profitable way to all clients.
When there is only a single service level on offer, clients who are generating more revenue for your business simply subsidise those who are lower value clients. This situation is very attractive to your low/no value clients, while being unfair and unattractive to those clients who are more valuable and the drivers of your business.
There must be a better way… and that is having different service levels to suit different groups of clients. For the more valuable clients, Brokers will need to offer a range of financial planning, advice and support services, along with ongoing ‘hands-on’ guidance. These are the types of services that the research identified as being important to and valued by your clients. For clients who are generating little or no revenue for your business, a lower level of service is likely the only viable option for your business. Such a lower-level support packages will probably entail some form of a hybrid offering with little time spent by the Financial Broker him/herself.
Of course, designing your service levels with reference to the value of clients is only one potential route. You may decide that clients can be grouped by other dimensions – factors such as the age of clients might be appropriate too.
Picking up on this age theme, consumer research gives some clues as to how services might be delivered by Financial Brokers in the future. As an example, in research carried out for Brokers Ireland in June 2022, clients of Financial Brokers were asked how they see themselves planning their financial future going forward. Of those aged over 55, 78% see this continuing through face-to-face meetings. However, this falls sharply through the age groups, with only 34% of those aged 25-34 seeking face-to-face meetings.
Also, consumers across all age groups who currently don’t use the services of a Financial Broker identified lower costs as the dominant factor that would encourage them to use a Broker in the future. Among the younger cohort, better advice apps and online meetings are also very important factors. Financial Brokers who want to operate in these target markets will need to devise lower cost offerings that require lower cost inputs by themselves.
Financial Brokers need to carefully consider such findings, examine every aspect of their service and client engagement proposition, and then devise service packages to suit the different group of clients. This will require you to pick apart each individual element of your service and client engagement, for which different levels of service will be offered and then identify the appropriate level of service to each individual service package. Once you have identified which service package fits best for each of your existing clients, and you have target numbers for future clients at each service level, you then need to review your capacity and capability to deliver. How many clients can you actually deliver a premium service level to, in a way that will demonstrate how much you value those particular clients? Your capacity to deliver is key – otherwise you can end up in that awful place of over-promising and under-delivering… Challenge yourself, but always with a healthy dose of realism!
The purpose of differentiated service levels is to provide more value to those clients who provide more value to your business. Or to be able to provide services to different groups of clients in ways that they want to be serviced. While at the same time ensuring that your precious resource, the time spent by you and your team looking after your clients is allocated optimally. Clients are happy… and so is your bottom line.
