Balancing compliance with the client experience

Although we can all understand the need for a regulatory regime that protects clients, advisors repeatedly cite compliance and regulatory requirements as a major burden. All too often, the regulations designed to help investors simply become a pain point in the client relationship.

However, some firms are starting to recognize that there’s a better way to be compliant than simply following the rules blindly. They’re developing client-intimate programs, rethinking their processes, redoing their forms and leveraging digital technology to improve the overall CX while still meeting their regulatory requirements.

This is critical because “revenue is now driven more by client retention than client acquisition” in the financial services sector, according to a recent study from the CFA Institute entitled The Next Generation of Trust. Given that, firms that place a priority on client satisfaction will gain a competitive advantage.

Let’s consider the client onboarding process, as an example. Currently, meeting the regulatory requirements is often a labour intensive and time-consuming process. But robo-advisors have led us to think differently about how to approach client onboarding. These firms manage to satisfy compliance requirements while delivering a smooth and simple CX. 

Here are some steps advisors can take to balance the sometimes conflicting demands of compliance and client satisfaction:

> Think about the “why” of the regulations
Rather than viewing compliance as a necessary evil, look at it in a different light. Think about the objectives of the rules and how they’re designed to protect or inform investors. By understanding the intent, you may be better able to provide context for clients, which will make for easier conversations.

 > Become friends with your compliance department
Get to know your colleagues in your firm’s compliance department and they’ll be more willing to work with you. Have empathy for their jobs and learn what it takes for them to meet their goals. This is an oldie but a goodie.

> Avoid bumps in the client journey
Think about all the potential client touchpoints and try to get in front of any that could be a problem. Give clients reasons why they’re completing forms. Let them know that these documents are designed to protect them from conflicts or ensure that their investments continue to be appropriate for them. This will help make the process more understandable and palatable to clients.

> Keep it simple
People appreciate simplicity; this is especially so for millennials, who demand it. Remember, most clients don’t understand industry jargon, so try not to overcomplicate your explanations.

> Keep what matters in mind
Trust, expertise and ethics are qualities that Canadian investors most value in their advisors, according to new research from the Investments & Wealth Institute. So, have clear and transparent conversations with your clients to help build that trust and credibility. Focus on what matters to your clients. They’re less interested in detailed explanations about how their investments work, but rather in how those investments will help them achieve their goals.

> Push your firm to adopt digital
Take a page out of the robo-advisors’ book and view digital technology as an enabler. Encourage your firm to use technology to meet client expectations around simplicity and service delivery.

If your firm is forward-thinking, encourage it to leverage big data, analytics and artificial intelligence to gain greater insights into investor behaviours that can help you deliver a more engaging and personalized client journey.