Journal of Financial Planning: January 2020
John L. Evans Jr., Ed.D., is executive director of Knowledge Labs™ Professional Development at Janus Henderson Investors. He regularly contributes to the Orlando Sentinel on business and politics and is featured in the Advisor Center section of Barron’s magazine.
JOIN THE DISCUSSION: Discuss this article with fellow FPA Members through FPA's Knowledge Circles.
What kinds of experiences do your clients have with you? Would they say that you’re reliable and that they’re satisfied with your services? If so, watch out. In a highly competitive industry, keeping a client “satisfied” may not be enough. Lack of conflict or complaints doesn’t necessarily equal loyalty. It could just mean the relationship is forgettable, and thus, vulnerable to disruption.
According to a study by Russ Alan Prince and David A. Geracioti, only 33.5 percent of “satisfied” clients and 13.4 percent of “moderately satisfied” clients said they would give their primary financial advisers additional investable assets. Yet 94.5 percent of those who identified as “loyal” said they were extremely or very likely to stick with their advisers. This study was published in the 2005 book by Prince and Geracioti, Cultivating the Middle-Class Millionaire; Why Financial Advisers Are Failing Their Wealthy Clients and What They Can Do About It.
Think of your own experiences as a customer at a luxury restaurant, hotel, or department store. Chances are your mind jumped to interactions that were either extraordinarily good or extremely bad. But experiences that are just okay? Those typically rank low on recall.
What Are Clients Saying About You?
The quality of your relationship to each individual client matters more than ever. Today, an estimated 72 percent of online adults use social networking sites, with the age 65-plus population tripling over a four-year period to 43 percent, according to the Pew Research Center.1 Your clients talk, and now they can talk to hundreds and thousands of their peers at once. What do you want them saying about you?
Sending your client a signed holiday or birthday card is a nice gesture, but it’s also a predictable one—the “go-to” for any service professional. So think about your practice from the perspective of an outsider and consider creative and consistent ways to make positive impressions.
The Difference Between You and Everyone Else
According to Thomas Fross of Fross & Fross Wealth Management, one of the most successful independent financial planning firms in the nation, there is no silver bullet for client management and retention. Key to your success is varying your strategy based on how your client likes to be engaged.
“Just as a balanced investment portfolio should include a variety of investments, a balanced practice management strategy needs to include multiple ways to engage clients and prospects,” Fross says. “Different clients will respond to different actions.”
However you choose to engage, there are three underlying principles that Fross recommends to help your practice stand out above the rest:
Image is (almost) everything. It isn’t everything, but it matters more than you might think. Think about how your image would be perceived by current and prospective clients. Do you exude professionalism? Having an office, wearing a tie, and taking the time to craft a consistent personal brand can all be important to your bottom line.
Talk to your clients. Your clients need information and reassurance on an ongoing basis, especially in a volatile market. Make it a priority to engage in frequent and meaningful communication with investors. If you don’t, studies show that they will move on to an adviser who will.
WOW them. Do you make your clients feel special? Do you acknowledge them in unique ways? Average isn’t good enough. But when clients feel valued and important, they are more loyal and more likely to refer you.
Providing extraordinary service can also expand your client roster. According to the Prince and Geracioti study, those “loyal” clients provided nearly 12 referrals to their primary advisers, compared to just two from “satisfied” clients and one or fewer from “moderately satisfied” clients. So that time and effort spent going above and beyond truly pays off in more ways than one.
Endnote
- See the Pew Research Center’s “Social Media Fact Sheet,” at pewresearch.org/internet/fact-sheet/social-media. See also the 2013 Pew Research Center article, “72% of Online Adults Are Social Networking Site Users,” by Joanna Brenner and Aaron Smith at pewresearch.org/internet/2013/08/05/72-of-online-adults-are-social-networking-site-users.