Customer service: The most boring, and important, aspect of your firm

Clients who feel they’re being ignored or getting second-class treatment will get fed up and leave, especially if investment performance hasn’t been great or the firm has dropped the ball somewhere else.

As an adviser, it’s easy to start thinking you’re God’s gift to your clients — after all, where would they be without you and your wisdom about planning, investing and all the rest? Plenty of people in our industry have this kind of complex.

The truth is, you’re replaceable. In fact, you probably have clients who are looking for an excuse to replace you right now. They’re contemplating moving their business to their cousin Sal. They’re playing footsie with the guy down the street and his can’t-miss investment opportunity. Hell, they’re thinking about replacing you with an app.

All of this is why basic, boring old customer service is so important. We’re talking about a very fundamental piece of blocking and tackling: promptly assisting clients who contact you with a question or a problem, and proactively communicating frequently, in between.

When clients fire their adviser, shoddy customer service is usually at least a contributing factor. Clients who feel they’re being ignored or getting second-class treatment will get fed up and leave, especially if investment performance hasn’t been great or the firm has dropped the ball somewhere else. Even worse, they’ll complain about you to their own circles.

A recent industry survey a few years back found that failure to communicate and return calls in a timely manner were two of the top five reasons clients dump their adviser. Given the havoc the pandemic has wrought on society and the fact that people are sitting at home all day watching their stocks yo-yo, it’s a good bet that it’s now No. 1.

But it isn’t just about keeping the clients you have. Solid service can make or break your business development efforts, too. Think about it: The average prospect knows very little about the industry and therefore has very little basis on which to evaluate you. So the aspects of your business that they do understand, like service and responsiveness? They’ll be watching them like a hawk.

Here are some best practices centered on client service (and yes, at Potomac we eat our own cooking):

Have a company policy on timely responses to client communications. The best firms respond to non-urgent incoming inquiries within a few hours. Even if you don’t have an answer to a question immediately, acknowledge the inquiry and go find the answer. As a very successful adviser continually reminds his team: “If somebody calls you today, chances are they want to talk to you today, otherwise they would have called you tomorrow, right? So we need to call them back today.”
Have a backup system in place. If a client point person is out sick, on vacation or whatever, make sure the client’s voicemails won’t go into a black hole. At Potomac, we created an email address that’s continually monitored so that inquiries don’t fall through the cracks.
Adopt your clients’ preferred means of communication. You may prefer phone calls, but your client might find them tedious and disruptive and prefer to text. Some clients find texts intrusive and prefer email or a portal message. Make sure you and your team know how each client likes to communicate, and use that method consistently. A little consideration can make a big impression.
Be proactive. Don’t make clients chase you, especially when markets are down. We’re about to see a wave of money in motion post-Covid because clients couldn’t reach advisers when they really needed them. Reach out and face up to whatever the problem is.
Look outside the industry for inspiration. Consumers don’t exactly love the financial industry, and service is a big part of the reason. When they think about our industry they think about FAQs, chatbots, being on hold and generally being blocked from reaching a helpful human. Study brands that consumers love. Start with Ritz Carlton.

Finally, don’t try to scale your customer service — it doesn’t work. Invest in the client service professionals who will make your clients feel as if they’re the center of the universe. It’ll have as big an impact on your business as any portfolio returns you can deliver. Factor it into your pricing. We’ve seen again and again that customers are willing to pay more for a really great experience.

Fact is, this may be the most boring, yet important article you read all year.

[More: 3 tips for customizing client communication]

Manish Khatta is president and CIO of Potomac Fund Management. Follow him on Twitter at @ManishKhatta.