Every successful advisor tailors recommendations and portfolios to the needs and situation of each client. But while the solutions presented are tailored, the broader communication usually is not. Despite giving higher-value clients more contact and attention, most advisors use a cookie-cutter “one size fits all” approach in communicating with clients and prospects.
My research over the past year identified four broad categories of key qualities that investors look for from their advisors. And the recent experience of one advisor shows that tailoring your approach to focus on the hot buttons for each individual client and prospect makes your overall communication much more efficient and effective.
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Dan Richards
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About a year ago, after delivering a talk at an industry conference, I was asked by an advisor named Susan if I had 10 minutes to talk over coffee. First, she gave me some quick background, describing how she had entered the industry about 20 years ago after working in a sales role in the tech industry. She outlined her success in building her client base and in surrounding herself with a strong team.
Then she got to the issue that was troubling her:
At a recent planning session with my team, we talked about the erratic response from all the effort we expend on behalf of our clients. I think we do all the right things: We create a written financial plan, hold annual reviews with clients to update those plans and are in regular touch with them on the phone in between. We send everyone a quarterly newsletter. We do an annual thank-you dinner for all of our clients, invite our top clients to special outings over the course of the year and send our very best clients a holiday gift.
Some clients are very appreciative, but a growing number take all of this for granted and we don’t get any real acknowledgement from them. Some clients don’t even respond to calls and emails to set up meetings or invitations for our annual dinner or special events.
All of this activity puts a lot of strain on my team. I know for a fact that we do a lot more than many other advisors who are just as successful. My team and I feel frustrated by all the things that clients don’t seem to notice or appreciate. I have been questioning whether I should pull back on some of this activity.
What one quality sets your advisor apart?
After Susan described her issue, we talked about the fact that clients often come to take appreciation for granted and that large-scale events can be a turnoff for top clients. My article, A Small Gift with a Lasting Impact, described how, for appreciative activity to work most effectively, it needs to tap into emotional hot buttons and be personal and unexpected.
But there was a broader and more fundamental issue at work for Susan and her team: for all her hard work, she had failed to tailor her overall communications strategy to the key drivers of each client.
That tied into an initiative that I’ve been working on for the past couple of years to better understand what drives satisfaction with advisors.
For some time, I have written a regular column on financial issues for the main newspaper in my home market of Toronto. As a result, people I meet at the university where I teach or in business or social settings will sometimes ask me questions about markets or the advice they’re getting. Starting in January of 2013, I began asking these people to tell me more about the experience with their financial advisors and asked if they would recommend their advisor if asked by a friend.
I also asked this same question in some one-on-one interviews with affluent investors, commissioned by a large financial institution. It gave me permission to incorporate the answers to that question into my project.
The vast majority of people say that they would indeed recommend their advisor to a friend. Then I ask them how they would answer if their friend next asked, “What one quality makes your advisor special and would make you recommend him or her?”
Each time I have this conversation, I made notes of the answers and later added the responses to a file on my computer in which I recorded what people have told me. Over the past two years I have made over 200 entries based on the answers to that question. I have seen four patterns emerge in terms of what people say are the key things that set their advisors apart.
Here are the things investors have said would make them recommend their advisors:
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Communication
The consistency and frequency with which investors hear from their advisors, how well their advisor listens and whether communication is clear and initiated by the advisor.
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Inspiring confidence and creating peace of mind
The extent to which clients trust their advisor, are confident that they’ll hit their goals and experience no stress or anxiety as a result.
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Investment performance
Clients’ confidence in their advisors’ expertise and investment process, including the ability to manage risk and the extent to which advisors are proactive in seeking out new opportunities
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Relationship and exceeding expectations
A deep bond with their advisors and the extent to which clients feel that their advisors go above and beyond in educating them and their family and being a resource on a variety of important financial issues
More details on typical responses under each category can be found at the end of this article. In a few cases, there is ambiguity and responses overlap between categories. I would caution that I have made no attempt to analyze how many clients fall into each category – first of all, because the sample is small and second because the people I talk to are typically in their 50s and 60s and tend to be more analytical and better educated than average, so are not representative of the universe of investors.
Susan and I finished by talking about how to identify the key drivers for each existing and prospective client. Last month, I received a follow-up call from Susan, in which she described how our conversation had set her and her team on a different course with some striking results.
Tailoring communication to key drivers
Susan began by describing how she and her team had put this idea into motion:
Step one was to create a spreadsheet of our clients from the ones with the largest assets down, with five columns beside the list. We labeled those columns communication, confidence, investment performance, relationship and other. Then we started down the list identifying what in our experience were the key one or two drivers for each client. In a few cases we weren’t entirely sure, but most of the time we reached a conclusion fairly quickly. In most cases, all we had to do was to think about the response from clients to the different things we do, and that gave us the answer on the hot buttons for those clients.
Next we talked about how to focus communication with each client in a way that reflects the things that motivate them. In some cases, we ramped up personal attention and cut out invitations to client events, for another group where the response to social events had been exceptionally good we increased those invitations and for others, we shifted our meeting agendas to spend more time talking about market developments and how client portfolios are being managed as a result.
What if she was uncertain about what motivates a client? Susan addressed this question with me:
When I’m unsure, I ask clients or prospects if they’ve ever worked with a lawyer, accountant or other professional who was truly outstanding. If they say “yes,” I ask them to describe what made that professional stand out. If a client or prospect says it was regular, proactive, clear communication that sends me one signal. If it was the quality of advice they got and the specific strategies they recommended, it sends me an entirely different message. And if I hear about their professionalism and confidence they felt in the advice that they received, that tells me something else.
Susan finished by talking about the results of this targeted communication:
Now my team and I start each month by going through that spreadsheet and identifying who’s going to do what in terms of reaching out to clients, keeping their hot buttons in mind. And we do the same thing for each prospect that we’re in touch with, focusing on the hot buttons that they’re looking for in an advisor.
We still do many of the same things we did in the past, as we believe many clients expect these, although in some cases we had explicit conversations with clients about how often they want to hear from us. Based on those conversations, in some instances we’ve increased the amount of contact while in others we actually cut back. But our biggest change has been in what we do in terms of client recognition and appreciation; for some clients we’ve pulled that back, in other cases we’ve increased it.
We’ve seen two big changes since we began this process. For prospects, we’ve become much more disciplined in delivering a single minded message that hits their hot buttons. We have seen an acceleration in new clients and think this was a contributor to that. But the biggest change has been that we’re getting much more positive feedback from clients. By tailoring our message, we’re doing a better job of meeting their needs. They’re happier as a result, and so are we.
More about what drives client satisfaction
Every advisor has a unique approach and unique client base so all of these categories might not apply to you. Despite that, the key takeaway from this is very simple: To maximize effectiveness in your communication with clients and prospects, you need to prioritize tailoring your communication strategy, the same way that you tailor portfolio recommendations.
If you want to explore this idea further, below are more details on what clients told me set their advisors apart.
Communication:
Follow up:
Typical comment: My advisor doesn’t just put a plan in pace, but she follows up to keep me informed and to help me stick to that plan as well.
Keeps me informed:
Typical comment: My advisor checks in on a regular basis to keep me informed of what’s happening with my portfolio and to answer any questions I might have. She also sends me regular updates on what’s happening with markets.
Listens:
Typical comment: My advisor really listens to what I have to say and gets who I am and what’s important to me.
Stays in touch:
Typical comment: I can rely on my advisor to be on top of things and to contact me when we need to make changes to my portfolio.
Straight talk:
Typical comment: I know that my advisor will be 100% honest with me and give me straight answers to my questions without pulling any punches, even when the answers may not be what I want to hear.
Confidence / Peace of Mind
Absolute trust:
Typical comment: I can absolutely trust my advisor to give me advice that puts my needs first, before any commissions that he makes from his recommendations.
Creating the right plan:
Typical comment: My advisor has created the right plan that reflects our family’s situation and will ensure that our family achieves our goals
Simplified my life:
Typical comment: Working with my advisor has simplified my life and means that I can spend less time worrying about my finances
Sleep at night:
Typical comment: I’m confident that my advisor has created a portfolio that will get me where I want to go, so I don’t worry about my investments even when the markets go up and down.
Investment Performance:
Expertise:
Typical comment: My advisor is really knowledgeable and stays on top of what’s happening in the market. As a result, I am confident in the quality of the advice that I get.
Investment performance:
Typical comment: My advisor’s disciplined and proprietary investment process means that my portfolio has outperformed.
New opportunities:
Typical comment: My advisor is always on the lookout for new opportunities to improve the performance of my portfolio. I regularly hear from her with new ideas
Reducing risk:
Typical comment: My advisor has constructed a portfolio that will manage the risk and volatility of my investments.
Taking an active stance:
Typical comment: My advisor takes an active approach to managing money. With her advice, when markets go down I don’t just sit there and take it. She makes recommendations that allow me to take advantage of market volatility.
Relationship / Going Above and Beyond:
Education:
Typical comment: My advisor is committed to making my family and me smarter and more knowledgeable investors
Extra Mile:
Typical comment: My advisor always goes the extra mile. She is someone I can look to for help on issues like dealing with my parents’ health or finding them a retirement home, helping my kids put a budget in place to save for their first home and ensuring that our cottage stays in our family.
Minimizing taxes:
Typical comment: My advisor works with my accountant and lawyer to minimize my tax bill, as well as ensuring that I take advantage of trusts and other opportunities to save taxes down the road.
Relationship:
Typical comment: My advisor truly cares about my family and me and is absolutely committed to my success. I enjoy having a coffee or lunch with him; he is more than my advisor, he is a friend.
Dan Richards conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written commentaries, go to www.danrichards.com.
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