FRUSTRATIONS WITH CRM2
The enhanced portfolio performance information and cost disclosure in clients’ account statements has led to delays, confusion and overabundant information.
regardless of the distribution channel in which financial advisors ply their trade, there’s unanimity that their firms are not meeting expectations in providing optimal service with their “client account statements” and “online account access for clients.”
This is evident in the “satisfaction gaps” for both categories, which were among the largest included in this year’s Report Card series. (A satisfaction gap is the difference between a category’s overall average performance and importance ratings.)
Specifically, advisors gave their firm’s client account statements an overall average performance rating of 7.5 and an overall average importance rating of 8.7, resulting in a tie for the third-highest satisfaction gap. Meanwhile, advisors gave their firm’s online account access an overall average performance rating of 7.9 and an overall average importance rating of 8.7. This produced a tie for the ninth-highest satisfaction gap.
A major reason for advisors’ dissatisfaction with their firm’s client account statements relates to the full implementation of the second phase of the client relationship model (CRM2), which mandated that enhanced portfolio-performance information and cost disclosure be included on client’s statements. However, advisors surveyed for this year’s Report Card series noted that the changes have brought an entirely new slew of troubles. For example, some advisors said the new statements were delayed; many others noted that the information on these statements was either incorrect or simply difficult to understand.
“Since CRM2 came out, apparently the client statements have never been correct,” adds an advisor in Ontario with Torontobased TD Wealth Private Investment Advice. “The December statements weren’t getting printed until mid-January.”
Adds an advisor i n the same province with Winnipeg-based Great-West Life Assurance Co.’ s (GWL) Wealth and Insurance Solutions Enterprise (WISE) network: “If a client doesn’t understand [the statement], then it’s a make-work project.”
Advisors also complained that statements now are far too long and overwhelming for their clients.
“We used to be able to print a nice consolidated client statement on one page,” says an advisor in Ontario with Markham, Ont.-based Worldsource Wealth Management Inc. “And now, depending on how many accounts a client has, the statement could be 30 pages long.”
Despite concerns regarding the client statements, advisors also noted that firms have their hands tied because of the regulatory requirements.
“It’s not [the firm’s] fault; it’s the sector [as a whole],” says an advisor in Ontario with Waterloo, Ont.-based Sun Life Financial (Canada) Inc. “Clients pretty much have to take [account statements] to a lawyer to read them now. I don’t think [regulators] realize they’ve made the statements so difficult for clients to understand.”
In fact, regulators’ desire to provide greater disclosure to investors is having the opposite effect, says Dave Carr-Pries, vice president of client engagement with Toronto-based InvestorCOM Inc., which designs and produces client account statements for financial services firms.
“Disclosure or information is great. But when there’s too much of it, it counteracts the intent,” he says. “Advisors point out that investors are feeling inundated with paper and reporting. [That] creates this bureaucratic friction between advisors and investors, and that has really come out [with CRM2-mandated statements].”
One way to lighten the load for clients is for firms to provide account statements digitally, Carr-Pries says. In digital format, investors can be given what they need and want to know most right up front without worrying about disclosure.
“You can create an experience that says, ‘Here’s how you’re doing and here’s what it’s costing you. If you want to know more, you can go to the next layer; but if you don’t, you can stay here’,” Carr-Pries says. “Everything will be there, but it won’t be right on the surface.”
Nevertheless, advisors’ opinions were mixed regarding the value of providing clients with online access to their accounts. Although some advisors said that online account access allows clients to stay on top of their finances, other advisors said that clients either don’t care about this access or don’t understand the information available.
“[Online account access is] i mportant because clients want to have confidence,” says a Worldsource advisor in British Columbia. “All their questions can be answered without having to pick up the phone and call us.”
Other advisors noted that clients expect the same type of online access they receive from their banks. (In fact, of the firms that received the 10 highest ratings i n this category, five were either banks or their brokerage arms.) For example, an advisor in B.C. with Toronto-based Royal Bank of Canada says: “The fact that you can have single-access log-in that will get you access to both your investments and your banking is so great for clients. It’s very intuitive.”
Some advisors noted that online account access causes unnecessary complications, particularly because information is confusing to clients — or clients are looking at this information regularly and shouldn’t be.
“I’m not really big on clients having access to [their investment] accounts,” says an advisor on the Prairies with GWL’s WISE network. “They tend to only look at it when they’ve listened to [a news anchor] scream at them when the markets are going down. I need to be in the room when [clients] are looking at this stuff so they can understand what it means.”