COM­MU­NI­CA­TION

FRUS­TRA­TIONS WITH CRM2

Investment Executive - - NEWS - BY LEAH GOLOB

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.”

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