The power of cultivating personal connections

If you ask financial advisors what business they are in, most will answer that they are in the relationship business—not retirement planning, investing, or wealth management, but relationships. These advisors understand that most of the services they offer can be commoditized and easily found elsewhere. Their true differentiation comes from their close relationships with clients and a deep understanding of their needs and goals.

Yet, advisors are often slow to engage in specific activities designed to foster these personal relationships. While some advisors hold in-person events, such as dinners, parties, and seminars, many view these activities as too costly in terms of time, money, and effort. And after Covid-19, firms may not be ready to reengage in face-to-face settings like they used to.

Commonwealth recently conducted a research survey with advisors from our largest enterprise firms. We asked the group questions about various business activities to try and gauge which ones achieved the biggest ROI and where the advisors saw their best results with existing clients as well as prospects.

For existing clients, it was clear that focusing on relationships was paramount. Ranked after referrals in terms of success, roughly 55 percent of advisors said that in-person events were the most effective in retaining clients or gaining new assets from existing clients. This was by far the activity that yielded the best results.

The fact that client events were the top choice is noteworthy for the following reasons:

• Meeting in person deepens connections. While many advisors have embraced Zoom, Teams, and other methods of holding client meetings virtually (as they should), seeing someone face to face and having a shared experience still matters. Research consistently indicates that advisors who spend time with clients socially gain more assets and referrals than advisors who have a strictly business relationship. When you’re out of the office, relaxed, and perhaps sharing a cup of coffee or a meal together, you communicate differently. And usually, you talk about what’s really important to clients, such as family, health, hobbies, sports, and volunteering. This is where relationships and connections begin to deepen.
• Holiday events go the extra mile. The weeks from Thanksgiving through New Year’s hold countless opportunities to get social with clients. Perhaps your firm is hosting a dinner or planning a celebration that could be leveraged to invite more people. This approach is a wonderful way to be in front of people and let them know you care about them. Plus, people are usually at their best in holiday gatherings—who doesn’t enjoy a good party?

But what about advisors who wish to focus on finding prospects? Our research survey asked firms to rate the most effective new client acquisition activities, and the same approach that worked with current clients is also the best way to bring on new clients. After referrals, in-person events were ranked the number one way to reach prospects and gain new clients.

It’s time to get social

This holiday season, it’s important to focus on opportunities to get social with clients and sit down with them face to face. If your firm doesn’t have plans to host an event, consider organizing a small, intimate dinner or gathering on your own. You can also clear your schedule to give yourself time to attend any client parties or events you are invited to. It’s a great way to meet the family and friends that matter to your clients, and while you should never talk business at a social event, you might meet people to follow up with at another time. Personal connections matter!