For generations, financial advice has been viewed as a commoditized industry, not an experiential one. That’s starting to change and registered investment advisors need to get on board with the trend because increasingly sophisticated (and demanding) clients are expecting as much.
The Merriam-Webster dictionary defines experiential as “relating to, derived from, or providing experience. Advisors should be relieved by that simple definition, yet they should realize that the economy at large is becoming more experiential and the advisory business isn’t an exception to that trend.
It’s simple economic evolution. For centuries, economies were focused on goods and services. However, as years pass, goods and services become commoditized and consumers/clients become more demanding and more savvy. Enter the demand for experiential treatment.
Advisors should take heed because the wealth management industry is rapidly evolving into an aspirational and experiential segment in its own right. That’s not something for advisors to fear nor does it many offices need to have Dom Perignon on tap. Additionally, it doesn’t mean that advisors need to focus entirely on high-net-worth clients.
Why Experiential Matters for Practices
Advisors know that they’re doing business in a hyper-competitive space and the race for client assets is fierce. Thinking along aspirational/experiential lines and deploying those concepts can help advisors standout in a crowded field.
“What happens when you customize the experience? When you design an experience that’s so appropriate for a particular person that it changes them in some way, then you’ve reached the final step of economic progression: transformation,” notes Sue Thompson of State Street Global Advisors (SSGA). “Transformations use experiences as the raw material to guide people to change and help them achieve their aspirations. Transformations represent time well invested.”
Consider the experiential element of advisory services this way. Yes, clients love the experience of a glamorous hotel or fancy restaurant, but those experiences are fleeting. High-quality advice and advisor relationships with an “experience” feeling have greater implications, more relevance and larger rewards. As Thompson points out, advisors need to go beyond “nice” because “nice” isn’t memorable.
“If your clients don’t remember the interaction, then it wasn't a truly distinctive experience,” she said. “Similarly, when we make things easy, we often routinize things for our team to make it easy to serve customers. This gets in the way of being personal — yet experiences are inherently personal. We must engage customers in personal ways to create valuable experiences.”
Clients Are Products
On the surface, viewing clients as products sounds negative or exploitative. It’s not and this is a methodology used frequently in the new economy. Think Facebook, Instagram and other social media platforms.
In viewing clients as products, advisors can take the unique approach of marketing the end, not the means. There’s value in that approach because it requires soft skills that when properly mastered, creates memorable experiences for clients and makes them feel valued. Speaking of adding/creating value for clients…
“The value you create for each individual client — which is directly correlated to the amount you can charge or earn — is equal to the core functionality you provide plus the net value of time,” concludes Thompson. “Net value of time is negative if you waste the customer’s time, zero if you provide time well saved, and positive if you provide time well spent or time well invested.”