In a series of previous articles starting here, we’ve set out what advisers need to do to comply with PROD. As a quick reminder, the rules require adviser firms to show that the key elements of their client proposition, namely service, advice and investment management, have been tailored accordingly for clients.
How to approach this tailoring is very much dependent on each adviser firm but, essentially, under the PROD rules, a firm’s client segmentation should:
recognise the differences between different segments of clients
understand their differing needs
make it clear how best firms can support these needs.
Looking at these requirements under PROD, client segmentation, done well, can actually provide adviser firms with an ideal opportunity to communicate really effectively with clients. Client segmentation can not only give firms a clearer picture of their target audiences, but makes it easier for advisers to develop tailored messaging that will engage clients more with their finances and potentially attract new clients to the firm.
The ability to establish the start of an effective marketing strategy, harnessing their client segmentation, also means firms can provide an even more valuable service to clients, with ‘calls to action’ that are really targeted at each client segment.
Gain some insight into your client segmentsFor advisers, a good starting point to think about targeted communication is to look at the client segmentation matrix your firm should have in place under the PROD rules.
Your firm’s matrix should be a document of your clients’ different needs and may be segmented by, as a simple example, your clients’ life stages, such as: ‘saving for the future (under 45s), the ‘nearing retirement’ (45-64) and the ‘enjoying retirement’ (64 plus).
By understanding these segments’ different needs and gaining some insight, your firm can design the right, targeted communication solutions for them that are meaningful and that resonate.
To gain insight into each of your client segments, spend time working out what the main issues, pain points and goals of each of them are, based on, for example:
financial goals, such as retiring early or repaying a mortgage
functional needs, such as needing to factor in inheritance planning or understanding retirement options
emotional needs, such as needing to feel savings are secure.
Giving your clients peace of mindSupporting clients in each of your segments with targeted messaging to help them achieve their respective goals can increase confidence and give clients peace of mind, which is especially important in these challenging times.
For example, if you take your ‘saving for the future’ client segment, your emails to them or social posts could be tailored to support them in understanding the basics of pensions and investments, perhaps including wider financial wellbeing content such as budgeting and general tips on saving to help repay a mortgage.
Similarly, with your ‘nearing retirement’ client segment, sending a milestone birthday email, card or text in advance of a client’s 50th birthday and 55th birthday, with tailored messages around their retirement options and drawdown, can help them prepare for retirement. And with your ‘enjoying retirement’ segment, your messaging in emails or letters could focus, as an example, on inheritance planning.
As a next step, you could then look to extend your marketing strategy out, by encouraging new clients and referrals to engage more with their finances – and perhaps accessing your platform’s client portal - using emails, social posts, or even video messages, to reinforce the basics around pensions and investments, and suggesting that they think about their ‘future self’.
Targeting each of your client segments with dynamic content at the right time, in the right way, with the right message can make much more of an impact than a one-size-fits-all approach to your client communications.
Whether your clients are at the start of their careers or are about to enter drawdown, timely and tailored messaging is more likely to be effective in engaging your clients with their finances.
Client segmentation can mean more efficienciesSumming up, your client segmentation matrix not only helps your firm meet its PROD rules, it has the added benefit of helping your firm focus its marketing efforts.
Overall, your client segmentation matrix can help you create a more efficient business, deliver greater client experiences and show real value by offering tailored communications.
And in these unsettling times, as clients look for reassurance, it has perhaps never been more important to offer timely and relevant messaging.
Speak to your usual Standard Life contact if you need more information about how to meet your obligations under PROD or take a look at our blog series on PROD, starting here.
The value of investments can go down as well as up, and could be worth less than originally invested.
The views expressed in this blog should not be regarded as financial advice.