For many financial advisers, referrals are the No. 1 way to attract new business.
Though it may seem backward, advisers might be better served spending more time and energy on current clients. According to
a survey of more than 650 individuals who work with a financial adviser or planner, 88% said they consider communication style and frequency before referring their adviser to family and friends.
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The old model of client engagement — annual face-to-face meetings and quarterly reports — is no longer satisfactory. Three-quarters of respondents value their adviser's ability to anticipate questions and contact them in advance. Additionally, nearly two-thirds of all respondents said they hear from their adviser infrequently.
It's clear that outdated and ineffective client communications are a problem, but also an opportunity for generating more referrals. Even if you've had previous success with referrals, if you want to continue growing your business, it's critical that you adapt to the changing times.
Where to start?
Overhauling your firm's communication strategy doesn't have to be a burden. In fact, adopting a process-oriented approach is the first step in further personalizing your client touchpoints and building stronger relationships. Below is a list of tips for how advisers can use communications as a differentiator:
1. Establish your unique communications strategy. Take inventory of the communication tactics that are working for you and figure out the holes. A few questions to ask yourself: Are you prepared to reach out to your clients when a market-related incident affects their portfolio? Are you sharing your thoughts regularly on your blog, on social media or in an email newsletter? How do you personalize communications for high-priority clients?
Think about it as a two-by-two matrix: "scheduled" or "ad hoc" and "personalized" or "broadcast." Being honest with yourself about how you organize your efforts will help you identify gaps in the ways you engage with clients.
2. Commit to a rhythm for regular communication. You don't have to go from zero to 100 mph with your communications, but your clients should know when they are going to hear from you on a regularly scheduled basis. Whether it's a monthly update on their portfolio or key holdings, or quarterly strategy discussions, your clients want to feel your presence.
3. When markets move, reach out: Remember back in August 2019 when the yield curve between two-year and 10-year Treasuries inverted and widespread panic followed? Events like this are a perfect opportunity to showcase your thought leadership with a visual-laden blog post or a quick update that explains your perspective and the significance of a yield curve inversion.
Your clients value your experience in these types of situations; it's likely one of the main reasons they hired you.
4. Identify a subset of high-value clients and test personalized outreach. Your most important clients, such as those with the most AUM or most referrals, deserve the highest level of service. One way to personalize communications with them is with a monthly email that contains deep-dive research on their largest holdings.
Giving insight into why you recommend holding a stock, or why you suggest gradually reducing the position over time, can inspire confidence in your abilities. See what type of engagement you get from your key clients and progress your strategy over time.
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It's all about creating a better experience for your clients, and it starts with meeting their communication expectations. If you're able to demonstrate your value to clients on a regular basis, you might start to see those referral numbers rise and your AUM grow.
Sean Brown is CEO of YCharts, an investment research, analytics and client communications platform.
