How to Build Consumer Loyalty and Advocacy In Financial Advice.

We pay more for brand names. We pay more for and are advocated of brands that have emotionally connected with us. The richer the emotional content of a brand’s mental representation, the more likely the consumer will be a loyal user. This thinking is just as relevant for financial advice as it is for toilet tissue and car tyres. Puppy dogs chasing a roll of toilet paper and the piece of mind of safety on a wet road have less to do with the end product and more to do with feelings and emotions.
Understanding, therefore, how people think is a critical factor in building consumer loyalty and advocacy. So just how do we make decisions and what occurs in peoples minds to help them evaluate situations? What do we need to know about how peoples minds work?

“Cognitive control and value-based decision-making tasks appear to depend on different brain regions within the prefrontal cortex,” says Jan Glascher, lead author of the study and a visiting associate at the California Institute of Technology in Pasadena, referring to the seat of higher-level reasoning in the brain.
In normal brain functioning people : a valuation network in the brain auto computes what's good and what's bad, before the person concerned has a chance to consciously understand the decision making process has occured. It is quick. It is intuitive and it is automatic.

This highlights the complexities in dealing with customers where you need them to make a considered rationale choice. The choice has less to do with the rationalities of your proposal and more to do with how they feel about you and your brand. In short they have a gut feel about what is good and what is bad for them: and if you have not connected with them then that good choice (rationally) seems the uncomfortable one.

Most people believe that the choices they make result from a rational analysis of available alternatives. In reality, however, emotions greatly influence and, in many cases, even determine our decisions. In a book, Descartes Error, Antonio Damasio, professor of neuroscience at the University of Southern California, puts forth that emotions are necessary ingredients to almost all decisions. What occurs is that emotions from previous experiences attribute value and impact how we consider the options in front of us. These emotions create preferences which lead to our decision. Damasio’s view is based on his studies of people whose connections between the “thinking” and “emotional” areas of the brain had been damaged. They were capable of rationally processing information about alternative choices; but were unable to make decisions because they lacked any sense of how they felt about the options.

Values

So if you are not using some method of assessing past experiences and values and hierachies in a clients decision making you actually leave so much of your process to chance. When it comes to money: we have values associated with our experiences and these values have been passed to us from our parents. If you are not questioning clients about these experiences your process is like waiting for a magic eye picture to appear.

Psychologist Valerie Wilson tells us that troubled relationships with money stem from childhood. Research shows that money habits are formed between the ages of 6-8.
Consequently these lessons (which we have learnt from our parents) shape the way we feel and act about money and money issues. Our attitudes to money bring with it a range of emotions and behaviour: they can be positive but they can also range from greed and arrogance, to jealousy and fear.

What all of this means is that that you need to embed in your process:
• a means of uncovering a clients values
• questioning on past experiences
• determining a clients hierarchy of choice assessment
• looking at a clients goals and the why of their goals so you can elevate a simple statement of a goal or objective to a highly functional progression and pathway that you indeed can influence
• a show casing of you as an individual and your brand

Dr Peter Noel Murray reminds us that the influential role of emotion in consumer behavior is well documented and studies show that positive emotions toward a brand have far greater influence on consumer loyalty than trust and other judgments which are based on a brand’s attributes. Only by building process in your business that is cognisant of: how people are drawn to brands, make decisions and order their values; can you truly expect to drive customer loyalty and advocacy.

The Science and Emotion Behind Trauma Sum Insureds

Is there a right way for calculating the appropriate sum insured for trauma? Do you have a rule of thumb based on a multiple of income or a formula for removing debt? Or is there a science to our art whereby we can combine the emotional fall out and the true cost of disease to determine a sum insured? Trauma cover, cover that provides a lump sum payment to assist an individual navigate through the treatment of a serious illness and focus on getting better not the stress of the financial strain, is where and when a quality adviser led insurance process is invaluable.

When my sister was diagnosed with a menigioma (a brain tumour that grows between the skull and the brain) there were a few things going for her:
• She’s a doctor and very quickly she had the best physicians around her
• It was thought to be benign
• It was operable
• She had income protection and trauma insurance

However what she had not had, was: advice. The policy for trauma did not make a payment. The income protection cover was inadequate relative to her salary at that point in time. Only through excellent financial advice post surgery was she able to maximise her income protection claim and secure an appropriate level and breadth of cover for income protection and trauma for the future.

As an adviser I worked with a rule of thumb for trauma. My best and most desired position was a sum insured that allowed for the removal of debt and the provision of one years income. My least favoured but lowest sum insured I would recommend was at least half a years income for the sum insured. Was this appropriate? That depends on the discussion I had with the client and their understanding with my guidance of the risks and outcomes.
Looking at the cost of disease in time and money provides some science to the process of calculating sum insureds. The Health Funds of New Zealand December 2013 report on the time of work due to sickness found that:

• An average of five weeks per person is being lost from the workforce as a result of surgical waiting list back-ups.
• Many thousands of New Zealanders waiting for surgery are having to take extended time off work, and also need loved ones to do the same so they can take care of them.
• 280,000 New Zealanders currently needed elective surgery with the average waiting time from GP referral to surgery in the public system was upward of 224 days.
• Almost a third of those needing surgery reported experiencing significant pain and said they had had to make lifestyle changes.
• More than half said their quality of life had worsened, mainly due to pain and mobility issues but also due to the psychological and financial stress of their ongoing illness.

A Canadian study, (Cancer and Work: A Canadian Perspective, 2011, Canadian Association of Psychosocial Oncology) reminds us of what we know only all too well that Cancer is a complex array of illnesses that can bring a potentially overwhelming spectrum of physical, psychological, social, emotional, functional and economic challenges. The paper concluded that there are broad reaching effects of having cancer on an individual’s worklife. And sadly that the development in the field of vocational rehabilitation and is fragmented and limited, in part due to its infancy.

This is where trauma insurance cover becomes incredibly important. Not only is the sum insured critical to allow required surgery and treatment to take place as soon as possible whatever the choice of treatment the patient embarks upon, but that they can do so without financial stress and further that upon recovery they have the resources to undertake vocational rehabilitation that can address the impact of the psychological and emotional strain of the disease and recovery.

The costs of disease, the financial cost to the individual and family must be also taken into account. As an example when considering the impact of Cancer the individual may also incur financial and economic costs, which are often overlooked when considering the impact of the disease (Cost of Cancer in NSW, 2007, A report by Access Economics Pty Limited for The Cancer Council NSW). This report found that non-financial costs are also very important – the pain, suffering and premature death that result from cancer. Although more difficult to measure, these can be analysed in terms of the years of healthy life lost, both quantitatively and qualitatively, known as the “burden of disease”.

Their detailed analysis found that, individuals bear around 40.4% of the total cost of cancer, with governments (42.1%), society (16.1%), family and friends (0.8%) and employers (0.6%) sharing the remaining costs. In regard to a dollar figure, the finding was this: that the total expected lifetime economic cost of cancer per person is around $966,000 – of which the burden of disease is $851,600 and the financial cost is $114,500.

Applying the 40% ratio does that provide a sum insured of $386,000? Perhaps, there’s a science to that calculation. Does it match up against my old rule of thumb? In some cases it far surpasses it, whilst in others it falls short. What it does highlight is this: that not all diseases are the same, in fact this Cancer Council report found that brain cancers can be double the calculation above. Not all the impacts on an individual are the same. Psychologically my sister was well prepared, was financially stable and had a good support network. Should these factors, those emotional input,s be part of your fact find and deliberations in determining a sum insured? Perhaps.

What all of this, points to is the value of advice, the matching of the art and science behind providing an insurance solution for a client. As the cost of cancer as an example, increases, as people live increasingly complex lives within complicated family structures, the value of a trusted adviser to shape solutions, bespoke solutions, has never been more important.

"The Trusted Advisor". Process? Mindset?

With so much talk, data, conversation and method, post FOFA on becoming a "trusted advisor" PCE wanted to in this post unpack one of the components of being a "trusted advisor".

Now to start...some perspective. The concept of the "trusted advisor" has been around for a long time. From Bacarach to Beddoes...from books published in 2000 by Robert M. Galford, 2005 by Charles H. Green, and 1997 by David H. Maister. In fact so widely discussed has this concept been that anyone fooled into believing that this is a new concept is incredibly naive.

But recent study has packaged up this concept into something more accessible. For a start one does not necessarily have to pay thousands for the process or take significant time out of the business to learn the process. But in saying that there are vast advantages in doing that. The concept has become accessible indeed but correspondingly more difficult to enact.

Without the process implementation just simply does not occur.

Further the key ingredient in becoming a "trusted advisor" is emotional intelligence.

Simple huh?

What is required at this point to help an adviser become a "trusted advisor" is the development of their EI.

What must occur is 4 fourfold:

1) Ones way of thinking needs to be refined so that a consciousness develops that challenges familiar notions of ourselves and others, challenging the truth of assumptions.

2) That then in turn allows us to assess the opportunities and the constraints that characterise our lives and the lives of others. It makes us look for a better way. And reveals what we and others can accomplish to reach our goals more effectively.

3) Doing this enables us as the "trusted advisor" to shape not only our lives and that of our clients but that of society. This is about being aware enough to give back.

4) And finally once self aware, we can easily recognise human differences and we can lead the way in confronting the challenges of living in a very diverse and changing world.

Critically thinking about ours and others strengths and weaknesses and being able to articulate that effectively to ourselves and others is the core of EI.

A process that you can implement is then in fact a great idea.

So when next the concept of a "trusted advisor" is rasied, look for the process.

Or keep reading PCE!