T here was a time when a financial adviser could build a practice around price and product, but that time was in the last century.
Everyone now has access to the same products and can offer the same pricing, making service quality the new battleground.
Clients realize how empowering it is to have knowledge at their fingertips and how simple life can be when a service provider anticipates their needs and tailors delivery. Access to a world of information and personal service is now a facet of everyday life.
It is only logical that clients would expect a similar experience when it comes to handling their financial matters. Advisers who can't or won't provide such an experience will find themselves irrelevant. If an adviser doesn't supply the information clients need when they need it, they will easily find it some other way.
The so-called experts are everywhere: an influential blogger, a representative at a bank or wirehouse, or the person staffing the call center of a personal financial management website. Those other resources might not seem threatening at first, but every time a client goes outside the adviser's sphere of influence, the relationship weakens.
To meet these evolved expectations, advisers must embrace new practices, leverage innovative tools and tap into different resources.
The first step in transforming an advisory firm into a client-centric operation is to develop a system that allows for continuing dialogue, regular communication and meaningful contact. These efforts will drive client satisfaction more than investment performance.
In a recent John Hancock Trust Survey, 25% of respondents pointed to inaccessibility and unresponsiveness as the top reason for not trusting an adviser. Poor investment advice came in a distant second — 13%.
And when it comes to interacting with clients, quantity matters.
According to Northstar Research Partners and The Sullivan Co., a brand engagement firm, 63% of investors who have contact with their advisers more than once a year describe themselves as “very satisfied,” compared with a 24% satisfaction rate for those with less frequent contact.
Advisers must also make room for in-person interaction: Face-to-face communication is quality time. It helps cultivate and maintain relationships that can withstand the test of time as well as market volatility.
According to data from Morningstar Inc., clients have reported that they prefer to have in-person visits from their adviser once or twice a year. Reaching out to clients with no sales agenda or motive other than to find out how they are doing can produce immeasurable rewards.
Inclusion is another pivotal component of a client-centric practice. The entire household — not just the individual on the other end of the phone or text message — is “the client.”
Shutting out a spouse makes a relationship especially vulnerable. That is why 75% of widows change advisers within three years of their spouse's death.
Other professionals, such as attorneys and accountants, also play a critical role in the client-centric practice. They are not adversaries but part of the advisory team.
Client-centric advisers respect clients' time. Instead of ignoring the fact that a client must meet with each professional individually, the adviser serves as the point person who brings the team together.
The adviser provides the platform for sharing documents and information, hosts meetings for the team at least annually and invites adult children to attend. This ensures that the next generation is informed and is comfortable with the team, which helps solidify legacy relationships.
A client-centric practice recognizes that clients want to be enlightened, guided and sometimes instructed on the web. They seek validation and engagement. Many adviser websites are crippled by a lack of interactivity and weak content that contains little educational value. That type of site won't hold clients' attention or satisfy their needs.
If advisers provide the appropriate tools and data, clients are less likely to be enticed by the growing number of substantive financial sites — or to jump ship when the markets are bad.
Edmond Walters is the founder and chief executive of eMoney Advisor LLC.