14 Key Innovation Strategies for Financial Advisors & Financial Organizations


(This post was originally written back in 2010 after I did a talk for the National Australia Bank financial advisory team. Sometimes, trends posts don’t bear up well with longevity. I think this one does)

I spend a lot of time speaking to global financial organizations — some of the world’s largest institutions — helping them understand what they need to do from an innovation perspective to stay ahead of fast paced change.

These talks are often aimed at the idea of “how do we need to transition our advisory services — financial planners, investment advisors, insurance agents and brokers — to keep up with fast paced change?” Here’s a laundry list of some of the strategies that I’ve been talking about:

1. Focus on growth

With so much volatility in the financial sector, it’s all too easy to take your eye off of the opportunity ball. As I noted in my remarks for a recent keynote to a group of senior bankers:

Never before has the need for financial advice for Australians been greater; only 20% of Australians are currently getting professional advice.”

That means there are tremendous opportunities for growth! For many, access to financial advice is still too hard and complicated – that’s why it’s a great time to innovate, in order to build market share!!!!

2. Structure for fast paced change

There are several certainties in the financial sector:

  • more business model change
  • more sophisticated competition
  • continuous business model disruption with new, young upstarts
  • continual shifts in consumer behaviour
  • technology-driven fast change, such as with the impact of mobile technologies

Quite simply, an innovative financial organization concentrates on aligning its structure and capabilities so that it can change quickly

3. Reshape brand messages faster

Clearly there’s a lot of fast-paced change in financial services with the rapid economic pullback, and it’s critical that financial institutions continue to reshape their brand at the pace of rapidly changing consumer perception.

Noted Jim Buchanan, Senior VP of Consumer Marketing at the Bank of America in an article in Advertising Age, October 2009:

Six months ago, we were trying to re-assure the market and consumers that we are safe and secure….now consumers are telling us they’re not worried about those things anymore…..What they are interested in is ‘How can you help me manage my finances?‘”

Innovative organizations ensure that the brand message evolves at the pace of a world in which volatility is the new normal.

4. Adapt to momentum of financial consumer change

Quite simply, the new financial client is online in a big way, and smart financial organizations will evolve their service and support message to these platforms. The numbers are staggering; in the case of my Australian keynote, I emphasized that:

  • 147 million people interact globally on social networks via their mobile phones – we can expect 1 billion within five years!
  • there are 1.6 million Twitter users in Australia – up 1,000% from last year
  • Australian’s now spend 16.1 hours a week on the Internet, compared to 12.9 hours watching TV
  • 25% of that time is spent on Facebook

The impact is clear: as noted by Mondaq Business Briefing in November 2009:

Australians visit social networking sites more often than financial services sites.”

The bottom line for financial and investment advisors is that social networks are an extremely effective tool to keep core clients in the loop; as an outreach tool, they’re fast, effective, unique, quirky, and certainly the story of the day.

Financial advisors have to go where the client is going, and should be thinking about how to become socially-networked oriented advisors.

5. Adjust platforms to this changing behaviour

I continue to emphasize with my global financial clients that the impact of mobile technologies on financial services is absolutely massive. Think about Wizzit, a South African service that is essentially a text message based banking system.

The reality is that the new financial consumer expects to be served on new platforms: as noted by Thomas Kunz, Senior VP at PNC Financial:

Gen-Y doesn’t reconcile checkbooks, and they don’t believe in float. For them, their balance is their balance.”

That’s why PNC has released a “virtual wallet app” available for iPhones. They’re reaching out to this new financial consumer in a big way.

Aggressive change with business platforms provides big opportunity for business model disruption. A key factor here has to do with new client acquisition: what’s happening is the point of origination of the relationship might change as people transition their banking to mobile devices. Opportunity can come from continuing to build the advisor and distribution channel into these new platforms.

And that’s not a threat – that’s a huge opportunity!

6. Leverage off of new peer-to-peer behaviour trends:

The new financial consumer relies more than ever before for advice from their social networks.

Peer-to-peer social driven advice through sites such as TradeKing is coming to the forefront: it’s a service that allows people to share stock tips and research through extended social networks.Does this diminish the role of advisory services — not at all, if you dive in and become a part of the peer-to-peer conversation!

7. Re-orient distribution channels

Here’s another key point: I’ve emphasized to my insurance and other financial clients that the next-generation advisor/broker/agent expects ever more sophisticated technology platforms to help support their role.You’ve got to make sure you are keeping up with their needs. In one survey in the insurance sector, 80% of brokers indicated that the sophistication of the technology platform of the provider would influence who they would choose to do business with.

According to Kevin Murray, EVP and CIO at New York-based AXA Equitable:

The younger generation of financial professional will almost demand online self-service….they will want to text any questions they have in to the service centre or self-service from their mobile device. We’re going to have to be able to provide that capability. It’s how they will operate.”

8. Build your own peer-to-peer collaborative knowledge networks

The new financial advisor is also thinking socially, and is actively looking for peer-to-peer collaborative knowledge.Imagine building a financial advisory team that is collaborative for ideas, shares insight on market wins, constantly leverages insight from new branding campaigns that work in unique ways, and constantly shares great ideas on new methods of converting leads into clients — that’s how this next generation works!

Back to Kevin Murray:

“They will also want an online collaboration tool to …find answers concerning product or questions from their customers. The X and Y generations are going to demand a different way of selling and servicing their customers.”

What’s it really all about? Freeing up their time to build opportunity, make sales, close deals.

9. Reduce churn through electronic relationships

Hsomething else to think about according to Chief Marketer (October 2009),

The average brand saw one third of highly loyal consumers in 2007 completely defect to another brand in 2008“.

People are far less loyal, and far more likely to jump ship at the drop of a hat. That’s why continuous innovation in terms of the relationship is critical — and that’s maybe why continually transitioning to new technology platforms such as an iPhone app might
reduce that churn

10. Better, more focused niche marketing

We’re in the new era of analytics and analysis, which provides new opportunities for advisors to reach out to markets previously unattainable. As noted by Money Management Executive in October 2009:

Financial advisers generally prefer to manage a small number of high-net-worth clients rather than a large number of small accounts, but recent advances in automation technology could change this dynamic.”

11. Innovate hard with the next generation

One of the biggest trends going forward is that right now, we are witnessing the early stages of a massive transition of wealth from one generation to another. The numbers are staggering: we’ll see $12 to $18 trillion in intergenerational wealth transfer In the next 12 years (US GDP is $12 trillion); and by 2053, some $130 trillion will have moved from one generation to another. That’s a lot of money sloshing around — and much of it is going to this new, tech-savvy financial consumer.

12. At the same time, rethink importance of boomer market

It’s easy with all of these points to think that new markets will come from new, uber-hip young people and hot new technologies.

But don’t stop with innovating with that market — also realize that there continues to be huge growth potential with the boomer market. In Australia, baby boomers will control 51% of the nations wealth.

Put that in the context of the reality that there is a huge adoption by Boomers of Facebook. They continue to more aggressively integrate technology into their lives; they’re busy researching health care, insurance, retirement planning and investment advice.

Online makes more sense than ever before — get your advisors there!

13. Evolve the approach

Insurance and financial services are products that are always sold based on fear — they aren’t bought. This reality doesn’t go away because of new technologies. What does change is that technology is a powerful enabler that frees advisors from having to focus on the mundane, routine, time wasting stuff, in order to focus on providing the advice & guidance that advisors can provide. Focus on the core role!1

14. Enact change

Many advisors will be in comfortable, established routines. Change is not easy. That’s why organizations in the financial sector that are trying to be innovative need to help existing advisors focus on the opportunity and the benefits that come with rapid change, rather than being fearful of the change that technology is bringing to the industry.

Bottom line? As I summed up in my talk — “Innovative organizations make bold leaps, in order to keep up — and stay ahead — of a faster future.”


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