Getting a good grip on behavioural analytics can increase productivity and improve the service planners deliver to their clients. But you first need to know what you’re looking for, and how to put into action what you find.

Imagine if you knew what your clients were going to do, before they really even knew it themselves. Armed with this knowledge you’d know how to communicate with them, what to say to them, and when. You could offer them new services at the moments they’re most likely to seek them or deliver new insights to them when they’re most likely to be listening.

In short order, you could significantly improve the efficiency and productivity of your business and, at the same time, the quality of the customer experience. That’s the aim of behavioural analytics, and it’s an approach to using customer data that’s well suited to financial advice.

We know that high-quality advice implemented well improves lives. Quality advice helps people understand what they can and can’t achieve, and to prioritise what’s most important to them.

For most people, financial advice supports them to behave in accordance with their values, and to save, spend and invest in ways that are important to them. It helps them feel more organised, and provides peace of mind that they can spend money today and still be responsible for the future.

They can feel free to experience life with the people who are most important to them and engage in the activities and causes they care most about.

The trouble is, too few people access advice.

According to CoreData Research, fewer than one-third of people have an active relationship with a financial planner. And this could be because planners aren’t giving what clients want, when they want it, or in the way they want to receive it.

Something has to change

There’s a number of reasons people don’t access advice. First, there are trust issues. Financial advice and product failures attract media attention, and the general public becomes wary of planners.

They’re also frightened.

Frightened of looking silly. Frightened of getting bad news. Frightened of being embarrassed about previous decisions.

They have regrets. Some people have done things that they shouldn’t have, like invest in things that they didn’t really fully understand. And most people know that there are things they should have done but haven’t, like save more or starting to invest.

Most people don’t think their financial circumstances warrant a financial plan. A financial plan is about portfolio construction, yield maximisation and tax structuring. They don’t need all of that. Their situations aren’t that complex.

The FPA’s whitepaper, Mapping Fintech to the Financial Planning Process – Why Fintech is Not a Threat, reveals that clients just want someone to help them set achievable goals and create an action plan to achieve them.

But a significant reason more people don’t seek advice is simply that most people believe it is just too expensive. According to research conducted by CoreData, around two in five super fund members are interested in receiving advice but are unwilling to pay for it. They just do not value it.

Good financial advice actually costs way more than nothing to prepare and deliver. The FPA’s whitepaper estimates that a comprehensive planning assignment would take, on average, 26 hours of work, and cost in the range of $3,715 to $6,063, depending on whether the planner does the work or leverages support staff to construct the solution.

In a world where customers are pricing financial advice at nil, something has to change.

Traditional financial planning is inefficient

The problem with the traditional financial planning model is that it doesn’t meet the clients where they’re at. And it’s highly inefficient. The entire process of providing a comprehensive advice solution – from initial meeting to implementation – is likely to take months.

Most financial planning firms have been slow to embrace new technologies for efficiency and to adapt to changing consumer behaviour. According to CoreData Research, just one in four planners use electronic tools in client meetings.

Too many planners are still performing their tasks like their parents did when financial planning evolved from stockbroking and the life insurance industries in the 1980s and 1990s.

Financial planning advice is generally conducted face-to-face, but that’s not what clients are asking for. Another study by CoreData tells us that while eight in 10 clients want to meet in person with a financial planner initially, once trust is established, the majority are happy to be serviced in other, more convenient ways.

So, if you haven’t incorporated the digital channel into your service offer, you’re frustrating your clients.

An engaging website with interesting content, including calculators and webinars, will allow your clients to learn and grow in confidence. They’ll know what they should be asking about and ask you better questions, so that your advice is more valuable.

More knowledgeable clients are one thing, but better-informed planners are an important part of the equation as well. It’s through the smart and effective use of data that planners can understand more about what clients need, and when they are likely to need it.

What is behavioural analytics? 

Behavioural analytics is the repeated, methodical exploration of raw data to reveal insights into the behaviour of consumers by identifying patterns and correlations.

A subset of business analytics, behavioural analysis focuses on using data to understanding how consumers act and why they act that way, which enables predictions to be made about how they are likely to act in the future.

Behavioural analysis takes a human view of data and enables service providers, like financial planners, to make the right offers to the right consumer segments at the right time. It should be a weapon in every planner’s arsenal.

Data-driven behavioural analytics can improve efficiency of every client interaction, and is one of the few remaining ways businesses can hope to achieve ongoing productivity gains and sustainable growth.

Organisations use behavioural analytics to develop deeper knowledge of what customers want and need, to improve the customer experience.

Real-time understanding of how clients are likely to behave allows businesses to tailor products and services in a way previously unimaginable, and to meet consumers’ increasing expectations of ‘digital intimacy’ in the relationship with service providers. They expect you to know what they want, when they want it, and for things to be easy.

Behavioural analytics work carried out by Janus Analytics has been shown to predict more than half of customer churn, and to predict it in time for businesses to act to prevent it. It has improved client acquisition by 25 per cent, and increased cross-sell conversions by a factor of four.

Importantly, it has enabled businesses to move from a reactive footing in dealing with clients to getting on the front foot, bringing new products and services to their attention in a timely manner.

What are you trying to solve?

From as far back as our cave-dwelling days, humankind has only ever developed technology to help tip the advantage our way.

The very human traits of persistence, adaptability and the ability to form trusting relationships, ultimately win the day.

Technological efficiencies can help planners to focus on what truly makes them indispensable to clients and to remain adaptable to client needs, reducing the likelihood of future obsolescence. It’s important to remember that at the end of the day, technology and data in isolation do not solve people problems, people do.

Businesses that have developed successful behavioural analytical solutions to improving client service have focused on a few key points.

  • They have done their homework
    They understand the needs and objectives of their business, as well as its comparative advantages and limitations, and they have developed an analytics strategy to match. Before starting, it’s clear what data they need to collect, and how best to collect it.
  • They never lose sight of the problem
    You’re ultimately aiming to solve people problems. A simple, commonsense solution, developed and implemented effectively, can be at least as effective as a seemingly elegant data solution. Pragmatic and practical business applications must firmly overlay any data-driven insights and proposed action.
  • They strive for continuous improvement
    Behavioural analytics is a living, breathing solution to lifting business performance and improving the customer experience, and it’s not a one-time, set-and-forget proposition. A behavioural analytics solution evolves with a business and its clients.

Putting behavioural analytics to work effectively in any business takes commitment and the right attitude. Former US Secretary of State and former Chairman of the Joint Chiefs of Staff, Colin Powell, once said there are no secrets to success.

“It is the result of preparation, hard work and learning from failure,” he said. “Excellence is not an exception, it is a prevailing attitude.”

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This article was also published online by Money and Life on May 17, 2018