The hardest thing to sell is something that the customer won’t enjoy for 30 years – let alone something that only delivers when they are no longer around.
This places financial advisers at the elite level among salespeople, even if that’s no longer a term that we care to use. As Robert Louis Stevenson said, “Everyone lives by selling something.”
It may be that this is an attribute that will be appreciated more when it is absent from targeted support journeys.
Now that the consultation is closed, and with pre-authorisation due to open in October, it’s not unreasonable to plan for a legal and regulatory framework and COBS 9B close to what was set out in CP25/17.
So that I could be confident in Dynamic Planner’s ability to support our clients and prospects with this regulatory activity, I first went through the guidance line by line and identified where we could help in each area.
I then took a Dynamic Planner licence and configured it, as I would if was an authorised target support provider. It took a couple of evenings.
The difficult task is to identify the interventions that would benefit consumers and get them to take action
With targeted support built on the Consumer Duty and PROD and within COBS, doing it within the regulatory parameters is the easy part. The more difficult task is to identify the interventions that would benefit consumers and – most importantly – get them to take action.
I came up with over 20 situations for customer segments where an intervention would put them in a better position. You and, more importantly, many consumers, would probably all come up with similar ones. So the big question is, why haven’t they done it already?
To find out, our Behavioural Psychology team, in conjunction with Henley Business School conducted a detailed study of 1,002 consumers. I thought I would share a few snippets with you.
Some three-fifths of respondents said they were either likely or very likely to consider investing some of their savings in the next few years. When asked what prevented them from taking advice, 30% said the cost and only 11% said it was their preference to do their own research.
Reassuringly, people were more receptive to ‘advice’ from financial services organisations than they were from family and friends. Very few were receptive to receiving advice from strangers on social media, with the majority very resistant to it. Even among those aged 25 to 34, over 75% were either resistant or very resistant.
The critical success factor will be the effectiveness of the communications and interventions
Respondents were also presented with the cash to investment example used in the FCA study titled ‘Reading between the lines: Understanding of targeted support in retail investments’, dated June this year.
Close to two-thirds (65%) felt that this new targeted support would make it easier for them to get help with their financial decisions, while 66% believed targeted support could help reduce confusion about financial products and options.
But just 39% said they would feel confident to act on a suggestion knowing it was not personalised. We might also infer from our experience that even less of those would actually do it.
This is the crux of the whole endeavour. The path to becoming a targeted support provider and delivering regulated targeted support is increasingly clear.
But the critical success factor will be the effectiveness of the communications and interventions. This is not only a commercial necessity; it is also a regulatory one.
Chris Jones: Making decisions about retirement and beyond
We might expect to see a battle for customers’ eyes and then their hearts and minds. I am a customer of at least five firms that I expect to deliver targeted support to me, and I am looking forward to seeing what they say to me and how they say it.
What can they do to replace the sales aspect of the adviser’s role? Will they know me well enough to segment me and understand my situation correctly? Will they be able to be sufficiently personal and relevant to get my attention?
Where targeted support enables ‘advice’ to be delivered at scale (consider it once, provide it to many), behavioural psychology enables sales techniques to be delivered at scale: study many to communicate to many.
The techniques that perhaps take years of practice and experience to apply in an individual meeting can be captured and distilled through scientific processes.
Through technology, they can be applied interactively and personally, nudging and influencing the consumer to act in the absence of individual interpersonal advice.
Sales is a journey of mini sales and influences, which, together, help people to make good, informed decisions
If there was a magic image, marketing or sales line that would get people to buy, it would have been used in financial promotions already.
Targeted support will enable you to be more personalised and specific with your communication; behavioral psychology can help improve those communications; but persistent attention and engagement improve the effectiveness.
Robert Cialdini’s psychology of persuasion tells us that small steps via a consistent platform engender consistency and commitment. Our own sales experience tells us that sales is a journey of mini sales and influences, which, together, help people to make good, informed decisions that improve their situation and outcome.
The alignment of technology, data and behavioural psychology is compelling not only for delivering targeted support but also holistic or simplified advice at an affordable cost.
A consistent continuum of targeted support, simplified advice and holistic advice throughout a customer’s life, from a trusted organisation, will enable more consumers to meet their financial objectives.
Chris Jones is financial services director at Dynamic Planner
