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An Outlook Financial Services Publication

Banking on Good Advice

How financial services companies can gain competitive advantage in advisory services

Seizing the opportunity in financial advice

Now more than ever, customers are seeking meaningful financial advice on the best way to manage their financial matters. Companies seeking to gain a greater share of the financial advice market find themselves confronting a torrent of headwinds. Customer loyalty is down in the wake of the financial crisis. Customers, particularly the younger generation, are more self-reliant and dont have as much faith in traditional financial advisor relationships. An abundance of financial information can be found online, where aggressive competitorstraditional and nontraditionalnow offer increasingly innovative advice services. To gain a competitive advantage, financial services providers must move quickly to transform their advice operations. Traditional approaches that heavily emphasize selling financial products will no longer win the day. Instead, the focus has to be on anticipating customers financial needs and finding appropriate solutions. To provide meaningful advice and strengthen customer loyalty, companies must first gain a deeper understanding of their customers needs and tailor advice to those needs, making it available to customers on a timely and reliable basis across multiple channels or entry points. For many, achieving this goal may require significant operating model changes. For example, by leveraging analytics, institutions can better segment customers and develop products to meet their needs. Reorienting front-line staff through training and incentivesfrom product pushing to deeper customer interactions is also vital. The financial advice market is highly valuable. Some institutions are already starting to reap the financial benefits of taking innovative steps in the right direction. Those that hesitate to develop the necessary capabilities to compete may be left to watch these significant opportunities slip away. Mark Halverson and Stephen Gardiner Senior Executives, Financial Services

In the post-financial crisis landscape, customers are hungry for meaningful financial advice. They want guidance on the best course of action to manage their financial affairs, including advice on wealth management and planning, financing major purchases and maximizing management of their day-to-day needs. To be the advisory provider of choice, financial services institutions must gain a deeper understanding of customers needs and offer a tailored, consistent experience at scale across multiple channels. Whether targeting the mass-affluent or mass-market, taking a segmented approach to advice is critical to remain competitive. Doing so is not easy, but the alternative may be watching clients walk out the door. Customer volatility is the new order of the day. Customers post-crisis are more willing to make their own decisions, more skeptical of big-name brands, more price-conscious and willing to abandon institutions that cant meet their needs. Financial services companies are also up against sweeping demographic changes. By 2018, the projected income of todays Generation Y (age 1830) will reach nearly US$3.4 trillion annually, surpassing that of the Baby Boomers. This younger generation differs from the Baby Boomers in two key ways: they integrate technology into their financial lives at far greater rates, and they dont value long-term financial advisor relationships as highly. With growing customer adoption of self-directed financial tools like and PNCs virtual wallet program, banks and other providers are left with little choice but to orient their advice around multiple points of accessincluding Web, mobile, service center and face-to-face interactions. Those that fail to adapt quickly will find it difficult to differentiate and grow market share.

The opportunities are out there

Leading institutions that invest in advice stand to improve customer acquisition and retention and increase share of wallet. Wells Fargo Advisors has demonstrated the value of providing advice through its Envision client investment planning tool. This tool can help clients manage investments

by assessing their financial goals, analyze a set of tailored investment strategies that match those goals and track the results of the selected strategies. Since implementing the technology, Wells Fargo has seen a dramatic increase in client adoption rates and asset share of wallet and lower attrition. Over a one-year span, households adopting Envision plans increased their assets under management by more than 200 percent over households without the plan. In turn, customers with a plan were four times less likely to leave than those without plans. Royal Bank of Canada is another bank gaining value through advice. Between 2009 and 2010, the number of personal financial reviews conducted by the bankstructured client interviews that explore everyday banking, credit, loans and investments needsincreased 43 percent. During that period, there was a 15 percent increase in sales per full-time employee.1 Top-line growth is not the only benefit of meaningful financial advice. Reduced costs can be realized through improved customer attrition rates. Front-line staff can spend more time growing the customer base than on replacing it. The business case for providing advice is strong. The money is clearly on the table, but financial services companies need to have a better understanding of what customers value in financial advice in order to grow their market share.

Four keys to meaningful advice

Accenture research and experience demonstrate that there are four key attributes customers look for in trusted financial advice. 1. Timely: The advice is there when I need it Banks, for example, typically deliver advice only upon a customers request and rarely at the moment when it is needed most. Instead, they need to deliver advice proactively and quickly so that customers can act on it. Chases Instant Action Alerts is one example of innovative advice. Chase customers can set up preset low balance limits on their accounts and receive instant text messages, emails or voice messages notifying them when their account has dipped below the limit. Another feature alerts Chases more
1. Reproduced with permission of Royal Bank of Canada

than 10 million mobile banking customers when they have overdrawn an account, helping them quickly determine how they might be able to avoid fees. 2. Accessible: I can access the advice on my terms From mobile and online applications to branches, customers want the flexibility to access advice when and where it is most convenient. One global bank built a unique system of touch points revolving around the lifestyles of its customers. Supported by a network of branches, kiosks, mobile and Web capabilities, the bank provides expert financial advice via tele-presence, becoming an extended part of its customers daily lives. 3. Tailored: It needs to be my advice Customers seek advice tailored to their specific financial needs, taking into account the products they hold, their financial history and future ambitions. A leading German bank delivers tailored advice to customers based on their segment, history with the bank and channel used. The banks system generates hints to call center staff about which solutions would be most appealing to the customer. Sales revenue generated from the program exceeded implementation costs within four months. 4. Reliable: I can always rely on what you are telling me Contradictory or inconsistent advice leaves customers confused, thereby contributing to a loss of trust. A Canadian bank is launching a new sales tool to help drive consistent customer conversations across its national branch and mobile sales force. The tool will help lenders discover customers needs in a structured, client-centric manner, regardless of which lender is conducting the conversation.

Making operating model changes

To deliver meaningful advice at scale, financial services companies must make significant changes to their operating models by developing three distinct capabilities. Leverage analyticsAccenture estimates that the client to financial advisor ratio in the industry today is over 250:1. With so many clients per financial advisor, companies are

underperforming on the advice attributes of timely, tailored and reliable as they strain to fully understand clients needs. By leveraging analytics, institutions can address this challenge by enabling a more intimate and accurate knowledge of their clients. Three critical steps are required to effectively use analytics in the advisory business:
nvest in infrastructure that supports the collection of I

actionable client data in an industrialized manner.

se this data to segment individual clients across behavioral U

and demographic dimensions. enerate closed loop advice solutions (in the form of G offers and experiences) specific to the needs of the client segment based on this data. Financial institutions leading the charge with advice analytics have progressed into advanced predictive modeling and triggerbased marketing that help align their solutions to the clients needs. A predictive modeling engine can provide consistent, accurate predictions of a clients behavior, which supports the delivery of reliable and timely advice. The engine combines intelligent and reusable business rules and peer-set comparisons in combination with client data to develop segment-affiliated advice. Iterative and self-learning through a closed loop, these engines continuously sharpen their insights as more client data is collected. Therefore, the longer a clients tenure and level of interaction, the more accurate the advice can become. Move from sales force to solution forceTo get the most value from their analytical capability, companies need to enable their front lines to effectively deliver advice. To do so will require shifting the orientation of the sales force from product pushing and transactions to anticipating customer needs and providing appropriate solutions through the desired channels. A leading North American regional bank developed a performance simulation training program that simulates an employees interaction with a client. The program, which adjusts its content based on the employees response and provides

customized feedback, enabled front-line staff to have deeper customer interactions and helped increase sales by four percent. Simplifying front-line processes is another path to creating a solution force. Outdated technology and complex, paperintensive processes leave little time for the sales force at institutions to focus on providing advice to customers. At one North American bank, the branch sales force spent more than one-third of its time on administrative tasks. By simplifying its origination process, however, it projects it will be able to reduce administrative time by 25 percent. Deliver advice across channelsFinancial institutions need to develop the appropriate breadth of channelsand depth in each individual channelto deliver meaningful customer advice. The online channel, in particular, is vital to delivering advice profitably at scale. California-based Yodlee, a leader in online personal financial management solutions, is one firm that is helping both financial institutions and customers break down traditional barriers and support the multi-bank customer. Through a major US banks online banking portal, Yodleepowered technology enables customers to analyze spending, conduct budgeting and establish goals across all of their accounts from various financial services institutions. This helps customers holistically manage their accounts while keeping the bank as home base for the customer. In financial services, the market for financial advice is extremely competitive with considerable financial value at stake. To differentiate themselves, companies must be able to deliver advice that is timely, tailored, accessible and reliable. To capture and take advantage of this opportunity, they will need to leverage analytics, deliver advice through highly trained and properly incentivized solution forces and provide advisory services on a multi-channel basis. Those that can quickly mobilize to develop these capabilities will be the ones best positioned to achieve high performance in this new world.
Accenture management consultants Richard Wiltshire, Kurtis Wilkinson and Kelly Yan contributed to this report.

The Point Volume 11, Number 3 The Point is a monthly thought publication based on studies, research and/or analysis by Accentures global Financial Services operating group and thought leadership team. For a more detailed report on this issue and information on many other financial services subjects and initiatives, please visit our website at
Fergus Reid Editorial Director Financial Services Marketing Communications email:

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