When self-interest eats empathy...

Welcome to the 55th edition of Leading with Empathy. In this edition, we explore examples of when empathy fades, the challenge with competitiveness in our complex world and some upcoming events you should check out!

Giving unwanted or unneeded advice

Over a period of 10 years, more than 11,000 customers were charged over $7m in fees for financial advisory services by one of Australia’s largest banks. On a per-person basis, this isn’t a huge amount of money averaging only around $65 each per year. So, what was so interesting about this group of people? Turns out, these people were charged fees for financial advice they didn’t receive. How do we know that these people didn’t get the personalised advice they were charged for?

The answer can be found in documents filed with the Federal Court in November 2021:

“The Proceedings concern the charging of advice fees by the Advice Licensees to the accounts of thousands of deceased customers for financial advice services that were not provided to the customer due to death.”

You read that correctly. Due to death. Also, it wasn’t that a person had passed and the bank didn’t know. They charged fees for financial advice, despite being notified of the death of the customer. These were fees for services including: “meeting with the customer to conduct a review of their objectives, financial situation and needs.” While we know these meetings didn’t happen, the fees continued to be deducted from the client’s account.

What makes this situation more worrying is that this wasn’t an old process or system that failed them. In fact, once notification of death was received, the accounts of that customer were frozen and fees stopped being paid to advisors. This was until early 2013 when an adviser raised a complaint that they were not receiving fees from a client, who they understood had died. Initially, a Senior Product Manager sought legal advice on if continuing to charge fees was acceptable.

You read correctly again. First a financial adviser, then a senior manager, both thought it was worth questioning why we would stop charging people for financial advice just because they died. While this senior manager sought legal advice on something you might think ethically obvious, fortunately, the advice seems to have confirmed that charging of fees should desist once a customer was deceased.

During the next few months, numerous emails were sent and meetings took place between managers and lawyers discussing the topic. These included discussions at the revenue losses faced by the business, the level of risk they were willing to accept and the opportunity for advisers to support the estate of customers after their death. Despite the conversations and clear ethical questions, the charging of fees continued.

Policies were drafted and distributed across the organisation requiring deceased customers' fees to be turned off unless a new arrangement was entered into with the estate of the deceased. Customers were being recorded as deceased in the system, reports were being generated clearly showing this and these were sent to various people across the organisation informing them of the customer’s status. Despite this, fees were still charged.

Over the next 5 years, the issue was raised and discussed by advisers, lawyers, management and support staff, but fees continued to be charged. There were numerous email trails shared between different project teams and senior management, but the charging of fees continued. In fact, it wasn’t until after the Banking Royal Commission that a specific policy was introduced to address the charging of these fees to deceased customers.

In the wake of these and other revelations across the industry, investment in Risk Management has been escalating. Risk professionals are highly sought after across many industries with organisations needing to find and fix a long list of issues like the one described above. While the addressing of these issues will certainly require many systems and process improvements, the real question remains, the complexity of our world will require more than just updated systems. It will always require people to make good decisions. We need a culture where doing the right thing is prioritised.

The boring reality of excellence

With my partners at Excelerate Consulting , I've had the pleasure of facilitating workshops with hundreds of teams of people running simulated banks in a virtual market. Their leading edge software creates an unparalleled environment for people to truly understand how banks work, how they actually make money and how things can go wrong.

In these workshops, we use the competition amongst the teams to drive the enthusiasm and learning experiences. Shamelessly, there is a leader board and at the end of the session, one of the teams is declared the winning bank. This competition is fascinating. Not only does it successfully drive the engagement, but it also shows us the types of behaviours that can quickly emerge and shape situations described above in the real world.

So often, we hear comments from teams such as:

"We need to do something radical"

"Let's do something wild so we can catch up"

"We need to go for broke now!"

In reality, these strategies almost never work. Session after session we see pretty much the same thing in the simulated world as we do in the real world. Success comes through simple, focused strategies that are executed consistently. The best banks in the virtual world look very much like the best banks in the real world. They do the simple things well. They focus on a clear set of principles: generally keeping the customers interests at heart and ruthlessly avoid doing something crazy to win.

The lesson for me is simple. There is no trick to success. There are no magic strategies or golden tickets waiting to be uncovered. Instead, care about the people that matter and be relentless in supporting them. Be they your customers, your employees and/or your suppliers: be the people they can trust and rely on... that's where so much success lives.

New Keynote Launch Party!

For my Melbourne connections, I'm hosting a launch party for my new keynote very soon. If you are in Melbourne on the 5th June, come along and join in the fun! Massive thanks to Ash Rosshandler and the team at GoodCompany for hosting this event, they are easily the best company to work with to streamline and super charge your volunteering and workplace giving.

Register here and see you there...

Giving Hard Feedback: June 2024

Final plug my next Giving Hard Feedback Masterclass. This is a cost-effective way to support your people leaders in uplifting their feedback skills and leadership capabilities. It is a 2hr masterclass, jam-packed with practical tips and tools to transform the important conversations in your team.

Register here:

Thanks for subscribing and reading, it is a pleasure as always to be connected with you.

Daniel Murray

danielmurray.au