The Return of the Financial Advisor: Giving More than PFM
Personal Financial Management (PFM) Systems have been fairly widely deployed, but only a few banks have surpassed 10% adoption. Some institutions have the most desired features incorporated into their online banking platforms, like aggregating information from other banks and providing a high-level dashboard. Perhaps what we have seen thus far is just a step in the evolution of our understanding of what resonates with consumers. Early PFMs tended to be very transaction oriented—you could check your balance or confirm a payment. Recent systems provide more analytics, providing an experience similar to Quicken, where users can understand their financial situation more clearly. Evidence suggests that the next phase, which users are asking for, will be advisory.
Many consumers are looking for a trusted advisor for their financial life. And, younger investors by and large strongly prefer in-person meetings with their financial consultants. Sadly, many traditional advisors are heavily focused on selling the most profitable product, like whole life insurance or high-load funds, instead of consulting on what the consumer truly wants. Fee-based advisors may be more objective, but consumers remain skeptical of their intent or lack the funds to engage them. And there are well known personalities that provide the advice parents are supposed to be giving their kids—spend less than you make, don’t try to keep up with the Jones’, and save up until you can afford to buy a home. But consumers even debate which of them to trust, Dave Ramsey or Suze Orman?
Advisory services are where the bank and the bank’s PFM can provide valuable services that will likely lead to additional sales. Deploying these capabilities in a mobile app would provide significant differentiation. There are a few keys to accomplish an effective advisory interaction. First, using the data already held in the PFM, credit report, and CRM, make reasonable guesses about the customer’s needs, but always validate them. Are you saving for a home? Do you want to pay off your credit card debt? Second, the suggestions must reflect a consumer’s willingness to adjust, while still pushing them. Sometimes the right answer is to get a second job or to stop spending on your credit card. This can be tough advice to give when you’d love to offer them a new card. Finally, cross-sell can be implemented well in PFMs. In fact, it’s hard to imagine an environment where consumers would be more receptive to offers or where better optimized offers could be made.
Cross-sell offers must be designed to be easy, just another step in the interface. Imagine accepting a card offer with just a few clicks. The account data could be made immediately available, perhaps provisioned into Google Wallet or Apple Pay while the physical cards are in the mail. No matter what, don’t ask customers to come into the branch to pick up their new card. That will break the entire digital experience.
One last note on advisory services: While PFM’s are designed to reduce dependence on the branch, many consumers do seek human interaction. When Kindle Fire Mayday was introduced, it demonstrated the power of live, human support. If I’m logged into my PFM, I should be able to offer my advisor the ability to look at my data and even to control my screen (once I trust them). Video chat will quickly become table stakes for any company seeking to take an advisory role.
PFM holds the potential to reopen the advisory door that has slowly been closed by decades of increasingly impersonal interactions. There are certainly challenges and risk in providing advisory services, yet the demand is significant and growing. As banks strive to reinvent the branch, consulting is clearly going to be a major component of their offering. Deploying those same services through more efficient and convenient platforms, such as PFM, can improve the customer’s bank relationship and facilitate new sales opportunities. Those institutions that respond to the need and truly help their clients achieve their financial goals will reap a lifetime of rewards.