This article forms part of WealthBriefing's latest research report on managing the client experience. Senior executives at US Registered Investment Advisors discuss standardised service models.

This interview forms part of WealthBriefing’s latest research report, The New Normal: Codifying Superior Client Experience In Wealth Management, which was produced in association with Barclays Wealth and Investment Management and will launch on 15 May. To mark the launch, a webcast featuring senior executives from Barclays and others has been produced discussing headline findings, and access to both this and the report itself will be free as part of WealthBriefing member benefits.

Here, senior executives at two US Registered Investment Advisors, Washington-based CIC Wealth Management Group and Springfield, Missouri-headquartered BKD Wealth Advisors, discuss how standardised service models are helping them to consistently deliver a superior client experience.

Standardised service models are rapidly gaining traction in the wealth management sector (most visibly in the US) and it seems that the industry is realising that a lot can be learnt from other HNW service providers, and even mass consumer chains. Indeed, in late 2012 Fox Financial Planning Network advised firms to develop a “Starbucks” client experience by building firms bottom-up with well-developed systems and operating procedures in order to deliver a consistently high level of service, which is also replicable and scalable.

For Jack Thurman, partner at BKD, the notion that clients prize bespoke service above all else might actually be overstated and he instead believes that clients are reassured by standardisation. “One of the reasons people go into Starbucks is they know that they’re going to get a great cup of coffee every single time
one of the reasons that McDonalds is so great is that you know you’re going to get great French fries every single time,” he said. Advocates of the “Starbucks approach” contend that wealth managers have a lot to learn from the almost obsessive attention to detail such multinational chains pay to service delivery and firms like CIC and BKD are developing service manuals which delineate, in granular detail, how clients should be serviced.

Ryan Wibberley, president and founder of CIC, explained that his firm has developed a service manual which is so precise that even a complete newcomer would be able to “literally come into our office today, sit down in front of it and carry on providing our level of service”. This manual has been the work of some years, but now provides employees with an online guide to every aspect of client service. “It covers every single step we take, from onboarding a new client, to every letter that goes out and what that letter says, to follow-up phone calls. We’ve systematised every step of the process all the way through to the client review process. We have a process for everything we do,” said Wibberley.

At a basic level, this level of granularity, such as insisting that follow-up calls take place 10 days after letters are dispatched, is quite simply aimed at preventing “things from dropping through the cracks”, he continued. To this end, every time a client requests something (even something as simple as mailing a cheque) this has to be entered onto the CRM system, actioned and “ticked off”. Adhering to this process is a matter of some discipline Wibberley concedes, since often recording a task will take as long as actually doing it, but he is convinced of its value – not least in terms of embedding best practice as second nature.

Advisor pushback

Predictably, not all advisors are immediately keen on this level of standardisation and both Wibberley and Thurman are candid about the need to convince staff of its value. As Wibberley said, “We have checklists for everything we do and sometimes it seems a little frustrating that we have to go through all these checklists”, he said adding that this level of standardisation is often “a very new thing” to fresh recruits and so he often feels that he has to “sell them on the idea of why we’re doing this, why we’re ‘wasting our time’ with all this stuff”. A degree of ongoing “sell” is also needed, he said, explaining that “I still have to do it, even with people who have been with me for years. You can still sense a little bit of frustration in that they have to go through these processes.”

In addition to the concept of standardisation being somewhat alien to many advisors, Thurman believes that some resistance might be down to the fact that, as “very smart people”, advisors will often have their own biases as to how they should serve clients. As such, advisors will often privilege the “nuts and bolts” of wealth management over its delivery to the client, focusing on what interests them (their expertise in the intricacies of asset allocation, for example) over what interests clients (which investments will allow them to retire when and how they wish to). Tackling this while avoiding any note of patronisation is clearly a delicate task. “I tell them, ‘This is not a matter of trying to teach you what you don’t know, it’s more about keeping things seamless and proactive,’” said Wibberley.

Exceeding client expectations

Wibberley and Thurman are convinced that a deeper cultural shift is needed which recognises that service delivery is a key differentiator, particularly for firms which don’t have the recognisable brands and advertising budgets of the bigger players. “What I realised is that anyone can do financial planning, anyone can provide investment views, it’s how you integrate it and deliver it which is really the differential,” said Thurman. “You need to have great financial planners and portfolio managers, but those are commodities, those are a given.”

Underpinning the approach of firms like CIC and BKD is a belief that they are services firms, rather than transactional ones, and as such their service models extend far beyond the day-to-day business of managing wealth and aim to deliver a “wow” client experience which demonstrates a deep understanding and appreciation of clients at every touch point.

To this end, BKD has taken the somewhat unusual step of enlisting the help of an acknowledged world leader in client service and a pioneer in sharing best practice: Ritz-Carlton. To learn from the luxury hotel group’s “Gold Standard” service model, BKD sent four senior staff members to Ritz-Carlton’s Leadership Center and has also had its experts come into BKD’s offices to speak to staff. This initiative is emphatically not about lofty theories but rather day-to-day execution, explained Thurman, and some of Ritz-Carlton’s practices have been adopted wholesale by BKD, such as daily 15-minute “line-ups” to appraise staff of all the clients coming in and that day’s workflow. As well as creating opportunities to make those clients feel special these

line-ups are also a forum to share examples of when superior client service was delivered, reinforcing company culture and also giving staff peer recognition for efforts which aren’t directly about writing new business. Such scenes might seem incongruous within wealth management, but Thurman reports that BKD’s staff are beginning to enjoy and look forward them; they also underline that superior service delivery has to be owned by all staff as part of “living the brand”.

Wibberley’s firm places a similar emphasis on recognising those who “go the extra mile”, encouraging staff to highlight their colleagues’ efforts and using this information in performance reviews. In fact, so codified is CIC’s commitment to making clients feel special that all staff (even receptionists) are enjoined to try to find out something new about clients every time they visit. Staff might then make a note to mark a client’s grandchild getting into a prestigious law school, or send a gift if the client is going on a special trip – little touches employees will then get tangible credit for at bonus time. Encouraging staff to “own” problems until they are resolved and “make good” with clients is also a major focus at both RIAs, and at Ritz-Carlton.

The rationale

Thurman and Wibberley are well aware of how some hard-bitten money managers will regard their standardised approach to client service, but both are staunch defenders of its merits. “The point of all this is to instill this culture and to create an environment where you are rewarded for doing it. Sometimes it may seem counter-productive or a little childish to do, but it helps us from the clients’ perspective to not allow things to fall down when all we had to do was pay attention to detail,” said Wibberley. This point about the primacy of the client’s perspective was picked up by Thurman, who had this to say to detractors: “To those who say it’s patronising and frustrating, I would say, ‘What do your clients think?’ People who say that granular service models are patronising haven’t asked their clients; clients want to have a standard.”

Thurman and Wibberley might be passionate advocates of standardised service models, but both emphasise that this has to be done intelligently, and in a way which fosters customisation within standardisation. As such, the standardised service model creates a starting point for bespoke touches to be embedded into a “failsafe” process. As Thurman explained, BKD’s system dictates that key clients have to be seen four times a year, but within this a client might be abroad for two of these reviews and therefore they might take place via video conference. “So you have standardisation - you’re still going to meet with them four times - but twice is going to be through Skype or FaceTime,” he said.

In this way standardised service models work can be seen as a blueprint to be ameliorated through the years as knowledge of the client builds: slavish adherence to a system is very useful in some regards, but that system has “flex” to give clients precisely what they want. This way of thinking might not be anything particularly new in wealth management, but hearing industry leaders talking about learning from coffee shop chains and hoteliers certainly is. It is a concept which is catching on fast, and both Wibberley and Thurman pointed out that their firms are far from alone in espousing it in the US. Smaller, independent RIAs might not have the heft or scale of the bigger players, but they are putting up a good fight for wallet share by putting client service front and centre. “Our biggest, most difficult competition comes from other firms like us. We’re not the only ones which realise that client service is the place to be moving forward in the wealth management space,” concluded Thurman.

Recent M&A figures from Schwab Advisor Services seem to confirm that acquiring firms are seeing real value in the RIA model, with 2012 deal volumes having rocketed up 30 per cent compared to 2011. The independence of RIAs is certainly one draw for both clients and advisors, but the time cannot be far off when acquiring firms cite replicable, scalable service models as another reason to snap up these pioneers of the “Starbucks” approach.