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Requirement
Question 1
What does Supernova offer to Merrill Lynch? Does Merrill Lynch need Supernova to be successful to grow in the future?
Answer:
Supernova offers three things to Merrill Lynch:
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Gives a multi-generation financial plan
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A regular contact with your FA (Once in a month)
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Always connected to the Users, solves problems and offers solutions quickly in an appropriate manner.
Thus, providing Merrill-Lynch with an advanced manner to manage client relationships efficiently by focusing on boosting the client satisfaction for which it uses 12-4-2 and financial planning along with organization, segmentation, and acquisition. These principals help the organization in modifying the traditional working ways for the Fas and aids in increasing their salary along with a selection of worthwhile clients. The results for the study of Merrill-Lynch on 75 Supernova FAs increased their production with 1% compared to non-Supernova FAs, which resulted in 6% decrease in production. Furthermore, a commendable 54% decrease in market errors was noticed leading to improved client satisfaction measure which encompassed:
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Satisfaction with associate client service
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Percentage of clients feeling they need more FA contact (declined)
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Percentage of clients feeling their FA exceeds in "looking out for their best interests."
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Satisfaction with FA (however, not by a statistically significant amount)
Yes, Merrill Lynch need Supernova to be successful to grow in the future because of the severe competition in the market where news firms have entered with effective strategies. Thus, it is recommendable for the Merrill-Lynch to have Supernova to explore various methods and ways to supports its profit growth, to keep up its state and reputation.
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Question 2
What is Supernova and how is it different from traditional financial advising models? What is the value proposition for customers?
Answer:
Supernova is a method or a way that was originated in one of the Merrill-Lynch’s offices and helps in client relationships management. It is adapted as an implementation strategy. It was introduced by Rob Knapp who used to run Mid-West District branch of Merrill-Lynch and in 1995, his branch was ranked last among 32 districts in the country. He is considered as the “father” of Supernova. Supernova helped his department to rank fourth regarding client satisfaction.
In the traditional financial advising models, it was strenuous for an FA to contact every single client and solve their problems as every FA was allotted 550 clients. Secondly, these models were unable to structure meeting and follow ups in a regulated manner which eventually led in time lack and inability to deliver information correctly. All this resulted in a high dissatisfaction amongst their long range of clients.
While Supernova aims to strategically make decisions regarding the marketing but value proposition is the fundamental basis of brand, product or services and every single thing communicating with it.
Question 3
Paint a picture of a Financial Advisor’s day using the Supernova process. How is this different from typical day under the old process?
Answer:
The daily schedule of a typical advisor usually will include the following:
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Prospecting – The amount of time and the method adopted for prospecting depends on the FAs. For example, a newly appointed FA will first understand 12-4-2 method and start building his books of 200 selected clients. Those FAs who are done with preparing their books will interact with their client and assist newly appointed FAs.
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Current clients Service – The FAs will now start with reviewing their clients meetings and portfolios. This might include answering the queries and questions of their clients and addressing their issues and worries regarding their moves. FAs will assists their clients by explaining them the best method for generation of new firms and business strategies.
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Administrative chores – The FAs are trained in a manner so that their day includes dealing with bureaucratic tasks like updating client records, trade ticketing processing, making compliance report, etc. Thus, FAs have to keep in mind every minute detail of their business.
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Financial planning – The FAs have to schedule their time and should be able to deliver services to their clients on time along with commendable attention paid to each and every single detail.
Previously only some of the FAs were indulged in the providing client satisfaction. And the factors like frequency and quality of contact, rapid response to problems and attention to details were disregarded.
Question 4
What changes were required to implement the Supernova process—for financial advisors? For Merrill Lynch itself? What were the risks and potential benefits for both?
Answer:
The aim of an FA is to bring in clients through various methods and ways. With the implementation of 12-4-2 in Supernova process, each FA meets with each and every client. These meetings include 12 monthly contacts, 4 portfolios and 2 face to face. But with the implementation of 12-4-2 FAs did not have enough time to deliver to their clients as each FA of Merrill Lynch had been allotted 550 clients. Thus, a need for segmentation, organization and acquisition were felt and then FAs started their book of 200 clients each. They were asked to have the up to date information on meetings and in the remaining time was dedicated to client acquisition.
Now the FAs were divided into two parts:
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Transactional FAs: The ones paid by charging fees per trade
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Annuitized FAs: Those who earned a basic salary and didn't have to try selling the product to clients all the time.
Benefits:
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(a.) Made selling of products easier
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(b.) The Supernova supported in increased knowledge of their clients
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(c.) A considerable time given to clients leading to client satisfaction
Risks:
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(a.) Economic Backdrop
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(b.) Politics and recognition
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(c.) Follow up/supports
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(d.) Misinterpretation
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(e.) Metrics
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Any potential challenges for its customers to adapt to the Supernova process?
Answer:
It has been noted that only 4000 FAs have adopted Supernova seriously, otherwise, every other FAs has been implementing partial "Supernova", which can lead to problems for clients and can impact their frequency and quality of contact, rapid response to problems, etc. Secondly, Supernova has increased the expectations of the clients leading to problems for FAs, who have implemented partial supernova. Thirdly, FAs have started seeing their role as gathering assets and have stopped performing the traditional role.
References
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1. Reid, J. (2016). Scaling Your Financial Advisory Practice, Supernova Style. [online] Blog.commonwealth.com. Available at: http://blog.commonwealth.com/scaling-your-financial-advisory-practice-supernova-style [Accessed 2 Feb. 2016].
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2. Myrill Lynch: Supernova. (2016)
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3. Nelson, T. (2016). Merrill Lynch Rolls Out Service Initiative. [online] Wealthmanagement.com. Available at: http://wealthmanagement.com/archive/merrill-lynch-rolls-out-service-initiative [Accessed 2 Feb. 2016].
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4. Knapp, R. (2016). The Supernova Advisor: Crossing the Invisible Bridge to Exceptional Client.
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