Over the weekend I saw a TV commercial for healthgrades, an online resource that helps consumers “find the right doctor, for the right care.” The service promises to help consumers “choose a doctor based on knowledge, not chance.” All consumers need to do is pick a procedure and a region and up comes a list of potential providers, ranked by how closely the doctor’s area of expertise and experience match the need, and, how high on a five star scale the doctor has been rated by patients with regard to the patient experience. The “experience match” covers the number of the specific requested procedures the doctor has performed, board certifications, sanctions, board actions, malpractices, practice focus, education, awards, professional affiliations and a profile provided by the doctor describing their practice and specialties. The “patient satisfaction” ranking is based on patient reviews that cover a range of variables including the office environment, staff friendliness, wait times and convenience, trust in the provider, providers’ ability to explain complex issues, time spent with patients, and overall level of satisfaction with the treatment.
In watching the ad for healthgrades, it reminds one again how anecdotal and unscientific the selection process of professional service providers often is, including the selection of wealth managers. How often are wealth prospects influenced by informal consults with friends or family, passing recommendations by related professionals, advice from casual acquaintances or friends of friends in their choice of a financial adviser? The ad also raised the question of whether such a service could be designed to serve the wealth management space and what it might look like. For better or worse, if such a service did gain significant traction in the wealth market, it could redefine the criteria by which advisers are selected. We think back to the founding of Morningstar and its mutual fund star rating system, which, since its humble 1984 beginnings from an apartment in Chicago, has become the primary tool for the selection of the “best” mutual funds.