Culture, Consumers and Competition
Working within a regulated environment always brings it's challenges, particularly when legislation changes on such a regular basis. Just when you have gotten your head and your business around one thing, another steps in to enhance the challenges you face as a financial firm.
The FCA have just published their 2015/16 business plan and this in itself highlights the priorities that they have set themselves for the coming financial year.
Martin Wheatley, Chief Executive of the FCA, commented "This is an important day in terms of setting out our priorities for the year ahead and also giving firms greater clarity on how they can expect to work with us."
In this article we briefly examine a couple of areas we feel that you must take account of in terms of how you manage client expectations as well as how you promote your services:
Catgories and Key Areas of Risk
A Strategic Markets-Led Approach to Legislation
Catgories and Key Areas of Risk
From this element of the business plan we focuses directly on Business Conduct which includes culture and consumer behaviours. These are two areas which we believe will impact considerably on your brand and services if they are not managed well.
This is an area where unfortunately, many financial firms fall short. This may be because the understanding and implementation of a culture that is embedded into every element of your business can be quite a challenge. The FCA expect to see a culture within firms that regains the trust of consumers and meets the their objectives of ensuring that all of your processes support and reinforce the culture you want to promote and that it starts from the very top of the business.
Whether you are an individual adviser/broker or an SME/large firm, culture impacts directly on your brand, your services and how you deliver them. At the heart of this and no doubt what the FCA wants to see is a strong impetus on putting the customer first. A strong business culture that is carried though from the senior management right down to client services and back office operations is essential to building and maintaining your brand reputation and sustaining your business.
Consider factors such as:
Values - what do you stand for and how do you project this to your team and therefore to your clients?
Bahaviour - how should you be working together as a team internally to deliver a superior service externally?
Expectations - what is required of you and your team to meet the needs of your business as well as your clients?
Experience - how do you utilise the experience of everyone in the business to create sustainability and improve your services?
Knowledge - what actions will you take to utilise the knowledge gained from your team and clients to build and maintain a good reputation?
Philosophy - what approach do you need to adopt to ensure your clients are treated fairly and know that they are dealing with a business that puts their needs first?
Attitudes - how do you ensure that you and your team understand the implications of dealing with clients in a way that puts them at ease and delivers services in an approachable manner?
Beliefs - what are they and why are they important for maintaining your culture and working effectively with your clients?
In their new business plan the FCA say that they expect firms to take steps to positively address the known behaviours and traits consumers may exhibit, rather than seeking to capitalise on them. To this end they have already published guidance on issues such as vulnerability.
Promoting your services and generating new business within this industry means there is a requirement for you to understand your target market and to ensure you are providing content that targets their needs more effectively.
You need to ensure that consumers have enough choices to enable them to make the right decisions for their needs as well as ensuring that they are being treated fairly for the life of the time that they are using your products or services. The FCA are well aware that firms with large back books may treat legacy clients differently to new clients and they are taking steps to tackle this.
Clients should feel confident that they have all the information available and that they are able to change providers if necessary. Are you serving clients in the right way when their circumstances change and if they potentially become more vulerable?
From a marketing and promotional point of view your communications need to emphasise how you deal with these requirements and again reinforce your culture and brand values in putting client needs first. How you manage this is through consistency of message and reinforcement through your sales process. If you say you are going to do something, then you should do it. Always make the effort to go the extra mile, so that you don't risk clients going the extra mile to find a new service provider.
A Strategic Markets Led Approach to Legislation
The FCA have also stated that they are looking to be more markets-focused broadly across all of the sectors they regulate and they will be conducting competition market studies, looking at the operation of those markets and deciding whether interventions are needed if those markets are not working in the interests of consumers.
They will be promoting competition in the interest of consumers, as well as addressing the potential effects of poor conduct on consumers and other firms in a sector. They also say that this is an effective and powerful way of identifying and mitigating problems and addressing these across a large number of firms, which in turn benefits a large number of consumers.
The financial industry is arguably the biggest from a remuneration point of view, but it is also one of the most competitive. From the information provided by the FCA on how they intend to deal with this it's clear that they will be actively helping consumers ensure they shop around for the products and services that best suit their needs.
By doing this in each financial sector, you may be affected by some if not all of their strategies depending on the services you provide. So if competition wasn't fierce enough already, if these changes are put in place rigorously, you can see that it is likely to get even harder to show why you are the firm consumers should come to for advice.
There is no such thing as a monopoly anymore, so competition will never go away in any case, but we also feel that if you are providing a high quality and valuable service; you take steps to review and mprove your proposition and; you are able to show and prove the benefits of this, you can mitigate the threat of any competition.
Thought leadership and knowledge of the industry also helps to build a good reputation amoung your clients and peers alike and is not just for large corporates who have promotional budgets that allow them to dominate the market. There are many ways in which individuals and smaller firms can make an impact and create advocates of their brand by developing a marketing strategy and using a range of promotional solutions designed to improve awareness.
At DPS Financial Marketing our core focus is our passion for helping financial firms navigate their way through the legislation, using our knowledge and experience to build a strong brand and promote their services effectively.
Contact us today for more information on how we can help you address the issues outlined in this article.