Client education is a very good topic in financial serviceindustry. It is big, however, difficult to tackle.
Client education is defined as the process to promote clients’recognition of products and service that providing related information orskills. Client education comes in various forms. It might be in the form ofadvertisement, it might be in the form of website introduction video, or itmight be in the form of face-to-face interaction with the consultant. Clienteducation aims at giving more information to clients. On one hand, clienteducation will help to enhance the loyalty of customer to our product andservice, especially when the client manager is open-minded, optimistic person;on the other side, well- handled client education will increase the stickiness ofclients.
During the 3- month time in the States, we visited a fewfinancial institutes. Different companies have different understandings ofclient education.
For the wealth management subsidiary of Busey Bank, theydivided their high end individual customers into several layers. For the topones, they are served by a high- level investment team. Almost all the teammembers have strong academic background and rich experience in the wealth managementaspect. In my opinion, the customer base itself is good enough; second, thestrong team has the ability to educate the small number of high end customer.
Even for the regular client, I believe Busey’s employees arecompetent at educating. For my own experience, there are not great pressure inthe lobby of the bank site. They have enough time and energy to talk to thecustomers and ask them good questions to do the customer evaluation.
When it comes Northern Trust, their criteria for individualclient is much higher than regular banks or asset management companies. Theyare more focused on long term investment goals. They help their customers toinvest in the mature investment channels, such as stock, mutual fund, bonds, orother financial markets. The managers in Northern Trust will send investmentreports to their clients regularly, and keep them informed the performance ofthe portfolios. One critical part of their client education is they first setand manage customers’ expectation by using market benchmarks. The markets willfluctuate but what they need to do is doing better than benchmark. The marketrisk is inevitable. Just like what happened in Great Depression and theFinancial crisis in 2008. They don’t need to beat the market all the time,which is also unrealistic, and unnecessary.
Nanhua Futures also taught me a good lesson in terms of riskmanagement. First for any customers they market, the qualification of market manageris their front line. These well-informedmanagers must reveal the risky part of the Futures market. And then thecustomers will take the assessment of risk. The whole process from opening accountto investment will be accompanied by manager.Besides, similar to Northern Trust’s customer, they also care more about thelong term target to grow wealth. Customers’ expectations were set at the verybeginning. They way they control trading risk is also very interesting.
From my understanding, the client education in our countryhas improved a lot, however, there are still many difficulties lie there.
Historically, both our banks and our investors are very young.The idea of risk and return is not as solid as in US. Especially from theplanning economy era, the image of state-owned banks will never go bankruptcy isstick into clients’ mind. Their expectations are unregularly high.
From the other point, we also are lack of qualified clientmanagers. Compared to the peer bank in the US, our managers’ educationalbackground and experience can’t compete with our peers. Besides, the number ofcustomers is another big difference. Just like the lesson we learnt fromStarbucks case, the incensements of clients unavoidably decrease the servicequality.
Recommendations:
1, Putting client education everywhere, from the first timethe customer openning an account in our bank.
2, Increase the number of client managers and provide more trainingopportunities for them.
3, Add more channels to communicate with customers. In US,besides face to face and telephone, e-mail is also a common way to connect toclients.
4, Borrow the idea of serving high end client in the form ofprofessional team.
5, Improve client managers’ incentive program.
“You can teach anybody anything. All you could to is to helpto find what goes deep in their mind”.
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