Culture, relationship management and productivity

Caroline Deutsch:

Increasing time spent with clients, which is known as golden time, is one of the key themes in the research. What do you think that companies can do to increase that golden time?

Donald Reid:

I think the key thing that they need to be looking at, is what are the financial planners or investment managers doing with their clients, and how can that be increased? And during our research, if you look at investment management led wealth managers, there's still an enormous variation between firms that provide a full bespoke DFM service at quite low levels as opposed to those firms where in order to have that service, you need to have funds well into seven figures. So, there are still a lot of firms out there where the investment manager is leading the relationship but is also running the portfolio. If there is a shift to more of a centralised investment solution and the clients are invested in model portfolio service or a unitised solution, then that can start to free up those investment managers to focus on more quality or golden time with their clients.

Then if you look at financial planners, there are still a large number of financial planning businesses where the financial planners are running portfolios for clients as well. And the opportunity there is for financial planners to leverage the expertise that the larger wealth managers can provide who are running centralised investment solutions and use the models or unitised solutions there. So that frees up financial planning time to focus on quality goals-based advice for their clients. 

Caroline Deutsch:

Gilly, anything to add on golden time?

Gilly Green:

Yes, I think Donald's mentioned the investment time. There's also quite a few people who still spend a lot of time doing admin for their clients, and of course automation can help with this, but I think there's some fundamental things that also need to be thought through. And we have seen some of firms doing the reverse of this, but actually boosting up your admin and support behind the financial planner relationship manager to book the diaries to literally, you should be taking everything off the desk of that relationship manager as much as you can because they're the guys that are not scalable otherwise. So getting much more admin support. We've seen a bit in the consolidation arena where firms have decided to cut admin and taken the ratios down simply because they think that that's easier to do than cutting financial planners. They're more expensive, but they absolutely own the client relationship. But also potentially centralising certain functions as well can help with productivity for sure, which means that sometimes people think centralisation is making it faceless, but it actually isn't. 

Caroline Deutsch:

So Gilly, how is culture a major productivity driver?

Gilly Green:

It is an interesting question because actually what really stands out in our report is that it's not necessarily driver—it's a barrier in many cases, and I'm going to point to the front office in this particular case where quite often we have relationship managers who say that the clients don't want something which can affect adoption. Best example is adoption of technology, digital technology. It's sort of a threat or people see it often as a threat to their own work if a client is going online and helping themselves, where in actual fact it's just an enhanced client experience. So that's one area. Also, I think a lot of the people who are relationship managers are a little bit older. Maybe they didn't grow up with technology. There's certainly a resistance to change. And then the third area, really, of this, is that we give people incentives that don't really drive productivity.

So when we incentivise relationship managers on the basis of revenue alone, there's no incentive to go and sell new business because their book might be full. There's no incentive to decrease costs or efficiency because they get paid on revenue, not on margin, but there's also a number of other things around there about client loyalty when a relationship manager leaves, the clients quite often, or some of them, might go with them. So there's an element then of being afraid to address this. And actually we have people who've said that they're almost afraid to do anything that will upset the investment directors, relationship managers, financial planners. So it is actually a very big issue, a big point to make in this particular piece of research.