Advisers Need Better Strategies, Technology for Client Communications

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Good advisers are great relationship managers.

They are the rainmakers, the go-to people and the face of the business. Probably without exception, advisers have been successful when they are able to go out and obtain and retain clients through managing those relationships well. This is one of the (increasingly) few things that ties all advisers together—they have very strong relationships with their clients.

But great relationship management is not enough to become a great adviser; or at the very least, a great firm. Clearly, a great adviser also needs to be a great financial planner. But then there are those secondary characteristics—outside of planning and being relational—that push an adviser from good to great. Chiefly, the adviser’s ability to successfully run a business.

FPA recently released a study on the communications practices of financial advisers and confirmed that advisers are great relationship managers, but many still struggle with implementing core business practices, especially technology and communication strategies.

Revealing Metrics

According to the 2014 Trends in Client Communications Study by the FPA Research and Practice InstituteTM, advisers give themselves an average rating of 3.9 out of 5 when it comes to overall effectiveness of the client communication process. Granted, this is still not in the range of “very effective,” but good nonetheless. The details, however, show room for improvement.

For example, of those advisers who seek client feedback, 83 percent “ask informally how things are going,” but only a minority conduct formal surveys, whether written, online or by phone. Just 10 percent have advisory boards. This is one of many examples showing high relational intelligence yet little formal marketing practices being applied by advisers.

When it comes to formally defined service standards, 56 percent of advisers have them in place, yet less than half of those advisers have a process to track whether or not they have delivered on those same service standards. The primary use of those service standards was to define how often the adviser meets with clients. These standards were used much less often to determine things like frequency of contact outside of those review meetings and the number of appreciation opportunities and educational opportunities. Again, a high focus on the relationship, but a low focus on the business strategy.

A Different Kind of Adviser

Of course, none of that matters if relationship management is the only thing necessary to have a great practice. But that’s not the case. As the study says, “Those who give themselves a high effectiveness rating behave differently. They define and communicate service standards, provide more documentation to clients, structure their review process and create more ‘touch points’ with their clients.” Among advisers who say they have “somewhat” or “very” effective client communications, a majority:

  • Formally define service standards
  • Communicate service standards to clients
  • Give Investment Policy Statements to their clients
  • Give clients a letter of engagement
  • Ask for client feedback
  • Have a clearly structure client review process
  • Encourage spouses to attend meetings together

Successful advisers also communicate more and in multiple ways. For advisers who segment and use tier service, let’s look at how often they are, on average, communicating in various ways with their top clients:

  • 9 face-to-face review meetings per year
  • 5 other review meetings per year (telephone or web)
  • 8 articles of interest (educational) per year
  • 3 invitations to social events per year
  • 3 invitations to an educational event per year
  • 9 other communications per year

From this and other evidence presented in the study, it’s clear that great advisers are going beyond what’s expected of them to deliver exceptional service to their clients by implementing strong communication strategies.

Future Plans

The study also indicates that advisers plan on strengthening their communications strategies in the future. This includes formalizing their marketing and communication plans and using technology to implement those plans, as well as to review and monitor what they’re doing.

Specifically, advisers mentioned using technology to expand the way they communicate with clients, especially younger generations. This means anything from web conferencing to changing the way they communicate, such as adding social media and more email communications. Advisers are also looking to create standards for communication processes and creating systems to make sure they are doing so effectively. They’re also recognizing the need to invest in technology as a way to automate workflows and respond to social trends. They’re looking to increase their ability to segment clients more meaningfully and let that drive processes and communication strategies.

Regardless of where you’re at with your own practice, take some time and look at the final sections of the study, featuring direct feedback from advisers about where they’re headed with their practices. Some clear trends will emerge and you may get some ideas on how to take yourself and your firm from good to great.

OLYMPUS DIGITAL CAMERAJeremy Miller, CFP®
Market Analyst
Advicent Solutions
Milwaukee, Wis.

Editor’s note: Visit Advicent Solutions at FPA’s annual conference, FPA BE Seattle 2014, Sept. 20–22 in Seattle. Look for them in the exhibit hall, booth 705.

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