A practical model for the evaluation of guidance
Knowing what your clients value and how they measure this is important - it can help you to ensure you are providing a valuable service and ultimately create a loyal, long-term client base. However, assessing this value can prove to be difficult as success has a different meaning to different people. So, what is the best way to find out what is particularly important to your clients?
To provide a framework to answer this, Vanguard’s Investment Strategy Group devised a four-part model for evaluating professional financial advice which is based on the following four areas:
Financial value
Investment returns are ultimately important in helping investors achieve their specific financial objectives. Advisers can engage in a myriad of financial planning strategies to help ensure that clients are prepared to meet the financial challenges that they and those important to them may face.
Portfolio value
This comes from building a well-diversified portfolio that generates better after-tax risk-adjusted returns net of all fees, suitably matched to the client’s risk tolerance.
Emotional added value
This derives from helping clients achieve financial wellbeing and peace of mind.
Time value
This comes from the simple fact that advice providers perform tasks that individual investors might not have the time, willingness or ability to perform on their own.
The figure below shows how the specific types of advice interventions and activities map to Vanguard’s broader advice value framework.
Identify your service value with a customer survey
To help you identify which aspects of your service your clients value the most, we have developed a survey for you to use with your clients. You can use the results to inform your firm’s service delivery, support customer retention and identify key marketing messages. The aim of the survey is to obtain a better overview of the factors that are particularly important to your customers.
You can use all of the statements in the attached document or make a selection of those that are most appropriate – you can use it in whichever way will provide the most benefit for your firm. You could also carry out the survey online through survey tools, for example, Google Forms or Survey Monkey.
When distributing the survey:
Send it with an email explaining the purpose of the survey, and
Assure your clients that you will maintain their anonymity and that their answers will be confidential.
Interpreting the results
The results of the survey show, at a glance, which statements regarding the evaluation of guidance received the highest scores. Those receiving the highest scores are the aspects most important for your clients. Conversely, you can see which statements received the lowest scores and are therefore of the lowest value.
You can then assess whether your service and your service profile meet your clients’ requirements or whether these need to be adapted. The data can also help you to determine which marketing messages are particularly well received by customers and therefore increase customer loyalty.
Action points
Consider undertaking the client segmentation exercise as detailed in our “Client Segmentation” article to determine the different categories of clients you may have.
Once you have undertaken the segmentation exercise, use this information to tailor your survey towards the different client-types. Setting up different online surveys for each client type could make the data you receive more useful and therefore your corresponding actions from this data more targeted.
Download the survey and consider if there are any questions you might want to add. The survey must provide value to your firm, so you can change it to suit the needs of your clients and your firm. Not many clients will willingly complete surveys on a regular basis, so ensure that every aspect of feedback from your client provides value.
Consider how you are going to share the results from the survey with your team: will it be through a company presentation or in document form? Use the most captivating way to engage your staff with the findings; graphics will make the data more interesting than a wordy document.
Using the survey findings, analyse the sources of advice value that are of particular importance to your clients. Identify the strong areas – those in which your business excelled in giving valuable advice – and the areas which may require improvement. Develop strategies to strengthen the areas of advice that are of particular importance to your clients. Consider reading our article “Implementing change” for guidance on how to carry out change processes within your business effectively.
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Important information
This article is directed at professional investors and should not be distributed to, or relied upon by retail investors.
This article is designed for use by, and is directed only at persons resident in the UK.
The information contained in this article is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this article does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this article when making any investment decisions.
The information contained in this article is for educational purposes only and is not a recommendation or solicitation to buy or sell investments.
Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.
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