Only consulting and qualification can build client trust
Essay by Prof. Dr. Rolf Tilmes
The financial market crisis has acted as a catalyst for the discussion on client-consultant relationships in Germany’s financial services sector. And tension in the debate, with disappointed clients and poor quality consulting, is of course made even more acute by the personal experiences of broad sections of the population, who have lost not only money but also trust and confidence in the system. While this loss of confidence has been caused in part by developments in the market, investors are also unhappy with the type of consulting they have received, which is often not tailored to their requirements, but rather based on the product-related sales targets of certain brokers. When clients are confronted with an approach of this nature, their needs and desires often remain misunderstood or even completely disregarded, which causes tension and ultimately motivates large groups of clients to simply go elsewhere. The key challenge for the future is therefore to win back client trust. Personal financial planning is the decisive success factor here, particularly in times of dwindling client loyalty.
In contrast to purely product-based consulting offers, financial planning always focuses on the targets, desires and individual situation of the respective client. It caters to client requirements over the long term and guarantees both inclusion and examination of all assets, wealth and specific circumstances of the client. Incorporating the individual circumstances of each client is a key way in which personal financial planning differs from business models that promote product-based sales interests. Long-term continuity of consulting also stimulates and nurtures mutual trust between client and consultant.
Personal financial planning not only offers higher quality and generates significant client benefit, it also allows qualified consultants and financial services providers to permanently distance themselves from the competition. Yet assuming a position as a provider of high quality solutions, in particular for wealthy private clients, also requires consultants that can prove their expertise through internationally recognised qualifications and certifications. Not only must they be able to demonstrate profound product knowledge, they must also boast excellent allround consulting skills, which from the client’s perspective can make all the difference to both the perceived and actual quality of consulting.
The world of politics has recently turned its attention to the topic of consumer protection, where many weaknesses have been identified – above all in the regulatory framework conditions, the qualification of financial consultants and the quality of consulting associated with the sale of financial products. Germany’s Federal Ministry for Food, Agriculture and Consumer Protection has chosen to focus the discussion explicitly on qualifications as the key factor in ensuring the quality of financial advice. Indeed, the introduction of a binding minimum qualification standard has been in discussion for some time now. And while for example the relationship between the way in which consultants are paid and the quality of consulting they provide has not yet been empirically demonstrated, there is clearly a link between consultant qualification and consulting quality.
Highly qualified and well trained consultants with excellent all-round skills, such as certified financial planners, already fulfil the strictest requirements regarding client-oriented financial advice. In competing for increasingly well informed, critical and educated clients, by offering personal financial planning companies can position themselves as quality providers of holistic consulting services and win back lost trust from clients.
Effects of the financial market crisis (all figures in %)
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