It’s that time of year. Yes, RRSP and tax season but also annual statement season. I have long found it curious how firms approach their annual statements, which are the most likely to be read information that clients receive from us.
Clients may or may not receive or read our newsletters, review detailed transaction summaries or monthly and quarterly statements, or parse our carefully crafted investment forecasts and market reviews. They may not even like to review their annual statements, because they are intimidated by their length, language or laborious detail. But many screw up their courage once a year to do it.
Many in our industry have taken the approach in their annual statements of grudgingly meeting the regulatory requirements, and sometimes telling clients so. In fact, statements are an excellent communication opportunity and a way to truly inform clients about things they deserve to know. These statements are an almost unparalleled client engagement opportunity.
Over the years, I have seen many statements delivered separately for each account in a client’s multi-account portfolio. No consolidated account view was provided. To get that view, the client would have to go through each statement to understand the situation in each account. This could literally involve a spreadsheet or paper on which to set out the salient information, and then doing the math. And that’s before making the effort to compare that information to the client’s personal goals. The process would be painful and time-consuming.
Today, many firms do a better job providing that consolidated picture and showing how different accounts fit into that picture. But few actually relate the accounts to a client’s goals.
Perhaps ironically, digital delivery can make understanding the big picture more difficult. Online, unless the client has multiple screens, comparing multiple statements involves a lot of windows and a lot of clicking back and forth.
Each year at this time, I am also reminded how committed we are to our acronyms: RRSP, TFSA, FHSA (I still have to look that one up periodically!), RDSP, RESP and so on. Unsurprisingly, as clients don’t live in this world day to day, they remember neither the acronyms nor the limits and rules associated with them. Frankly, they shouldn’t need to.
To really serve clients, we should think differently about client communications and documents such as annual statements. We should go beyond ticking the regulatory boxes and seek ways to better engage and meaningfully inform clients.
Here are a few tips for both advisors and firms.
- Take it up a level. Remember that clients care most about the overall picture. Their perspective is focused not on the account level but rather on their portfolio overall. If your statements don’t provide that view, find a way to paint that picture for them: leverage technology, build scalable processes and include your staff. Stay out of the weeds of the account — unless a client specifically asks to go there.
- Show progress against goals. Once clients understand the overall picture of their portfolios, relate that picture to their goals. Accounts themselves are not goals; instead, identify which accounts support which goals. Even consider breaking out the portfolio picture by goal.
- Use statements as a focus for client meetings. Clients will appreciate a guided tour of their statements but only at a high level. You can use the statements as a starting point for client meetings.
- Advocate. Encourage your firms to make client statements a priority — to support clients, not just from the regulatory perspective. Many statements as they exist today are a missed opportunity.
- Re-imagine statements. As total cost reporting looms on the horizon, consider opening up your statements more broadly and taking the opportunity to improve them.
- Ask your audience. By this I mean seek feedback from clients on your current statements versus what they would like. You may be surprised at what clients are looking for, and what information they’re prepared to forgo. Many don’t want to know how the plumbing works; they just want to know how to get water out of the tap. Detailed, acronym-laden explanations serve to confuse clients and lessen their desire to engage.
- Be bold in interpreting the regulations. Remember that the rules are generally principles-based, and the regulators have granted us considerable latitude to meet them. Also remember that the regulators’ overall objective is to inform and protect clients. They are open to different ways of doing so.
- Help clients and advisors, plus cut costs. Firms may be surprised to find that taking the opportunity to re-imagine statements will increase client engagement and advisor satisfaction, and can cut costs. Clients will notice and appreciate receiving information they care about and understand. Reducing the work advisors need to do today to demystify the statements for clients will be good for their businesses. Simply shortening statements will help on the cost and complexity side.
All in all, why wouldn’t we want to look for every opportunity to provide a better client experience by simplifying the language we use and the way we present information to clients? Humanizing the client experience with their financial services providers should be high on our to-do lists.
Susan Silma is a lawyer and former regulator with a deep understanding of the client perspective, and she is passionate about simplifying and humanizing the client experience in financial services.