With the coronation of King Charles III still fresh in the memory, his theme of ‘service’ to country made a lasting impression. If only more financial services companies could follow his lead.
Two of the most successful companies in Britain are the financial service giants Hargreaves Lansdown and St James’s Place. They both achieved the astonishing feat of going from mere start-up’s to joining the FTSE 100 index of Britain’ top firms in less than 50 years.
For them the 'customer was king', at least when it came to service and it paid off handsomely.
In its early years, Hargreaves Lansdown used to answer phone calls within five seconds. SJP also prided itself on the customer experience with a personal adviser, despite higher than average charges and outmoded exit charges.
Hargreaves Lansdown veered towards the higher end of the platform charging spectrum too, yet clients for a long time were happy because their reputation for admin was so good.
Be the most boring company on the planet when it comes to complaints. Be so superlative that you do not get any.If you are ambitious and want to turn your one-man-band IFA business to become the next FTSE giant, focus on customer service.
Amazon Prime’s logistics, for example, are a modern miracle. If you are already a sizeable institution, never cut back here as minimal service levels could kill your business slowly by attrition.
In financial services, there are just three things that really matter: investment performance, administration and charges.
You can get away with standards in one area dipping occasionally. If you have that most lethal combination of them all – poor administration and poor investment performance – that will sooner or later end your business.
Be the more boring firm on the planet
The most important thing, in my view, is to be the most boring company on the planet when it comes to complaints.
Be so superlative that you do not get any – just provide a routine, faultless service that people don’t even notice your well-oiled machine.
Nobody cares about admin – until it goes wrong. Yet customer service too often gets a low priority with a budget to match, seen as a high cost centre, not a money-making machine
Millions of one-man businesses from hairdressing to financial advisers routinely provide first class service daily. Yet few large utility or financial services company in Britain have truly exceptional customer service.
In particular, pensions and bereavement can cause difficulties
Pension service failures
One neglected area is legacy pensions. They often impose exit charges on leavers on some pre-2017 contracts. Why does the Financial Conduct Authority tolerate them, even with the 1 per cent cap? I would ban exit charges on all products from pensions to broadband.
If your product is fit for purpose, that should be enough to encourage loyalty – exit charges should not be used to finance acquisition or other costs.
It is surely the provider’s lookout if the service is so unsatisfactory or uncompetitive that the consumer wants out.
Pension transfers also have a dismal record. Transfer times have increased, despite every technology advancement.
Prominent offenders, according to the Origo Transfer index (April 1 2022 to March 31 2023), include People’s Partnership (formerly The People’s Pension), whose overall transfer time took 37.1 days, closely followed by LV, which recorded an average transfer time of 33.5 days, and NEST at 20.7 days.
An experienced financial adviser, with contacts at his finger tips and clout to match, can work miracles.In any delay, pension values can change by tens of thousands of pounds. Not my idea of good service.
Conclusion
Many unsung financial services heroes (including most FTAdviser readers) routinely give outstanding service, but few people are motivated to sing their praises.
It is only when things go wrong that people write to journalists, or complain on social media. We usually only hear from disgruntled customers when things go wrong, rarely when companies deserve our praise.
Even so, the litany of failings you can find on the Financial Ombudsman Service website (79,921 new complaints in H2 2022) shows why an experienced financial adviser, with contacts at his finger tips and clout to match, can work miracles.
If, like King Charles himself, advisers can live up to this noble ambition, a rosy future is in store. Failure to do so could imperil their very survival.
Stephanie Hawthorne is a freelance journalist
