Client segmentation a definite trend

Segmenting client service packages has resulted in clients becoming more engaged in the advice process, according to Zurich Financial Services’ national sales manager of investments, Kristine Wade.

Wade said Zurich had hosted a number of adviser forums over the last two years and while fee-for-service has been a major topic, the last session looked at uncovering the value of advice.

“Once they do that they have a lot more confidence around positioning fees and pricing the advice," she said. “We’ve refocused on selling fees to clients and ensuring that clients do see that value and have no problem paying the fee because they understand what they are getting from the relationship.”

Wade said advisers were paying more attention to their target client base.

“Most advisers will admit that when they were starting out, they would pretty much take anyone with a heartbeat, because it was about building funds under management to start building a steady income stream,” Wade said.

“With the focus on the value of advice, advisers are taking a step back and thinking about who is their ideal client that they want to deal with. I think advice will become more tailored to what they think an ideal client is, and that has certainly been a change.”

Wade said the reform package has been an opportunity for advisers to take stock of what they have been offering clients, and they have found that sometimes they did not charge enough for all the services they provided. She said there had been a lot of work done on client segmentation around service packages, which she said was definitely becoming an industry trend.

“Some advisers have been able to position different levels of service packages and they’ve actually found that clients are more engaged because they understand the service level they will be receiving,” Wade said.

However, she noted that marketing to their ideal client audience was a challenge for advisers, adding that Zurich has been working with advisers on redesigning marketing materials.

“It’s all well and good for the adviser to work out the client value proposition and then price it, but then if they don’t communicate or market that well to clients they are still going to have a problem,” Wade said.

However, she added that advisers would continue to benefit from referrals, which would attract their preferred client segment, as long as existing clients have a clear idea of what it is they actually provide.