How do you drive extreme client loyalty? How do you build relationship capital? And, most important of all, how do you do that routinely?
“Client acquisition always tends to be the shiny thing. It's sexy, it's cool,” observes industry consultant Stephanie Bogan. “Sustaining not so much. Yet, you have to feed and water or you’re losing relationship capital.”
Bogan looks at the client relationship as a series of deposits and withdrawals. Lots of deposits are made early on but once a prospect signs up, many advisors back off. And that, says Bogan, represents a withdrawal.
“Everything has the potential to be a withdrawal. Watching the news and hearing experts disagree about the markets is a withdrawal. When I hear that, is there a withdrawal in my confidence? Absolutely. All of these things are happening in the client psyche that these advisors never contemplate,” she adds. “The only way to counter withdrawals is to make deposits.”
Here are ways, big and small, to make those deposits into your valued client relationships:
1. Hire a Clientologist
Who is the person on your team who is naturally good at connecting with clients like nobody else can? “This is a departure for us in financial services. This is right brain. It's about creativity and innovation,” says John Evans Jr., executive director of Janus Labs. “Who can come up with the best ideas to delight clients consistently? That's your chief clientologist.”
The clientologist could be a lead advisor, a client services specialist, even a spouse. “This is not rocket science but it can be brilliant. If real estate is all about location, location, location, driving deep client loyalty and creating interpersonal alpha is all about information, information, information,” he notes.
How does it work? All information about the top 10% of clients flows to the clientologist, who hosts a weekly meeting to talk ideas. “It's the discussion among team members when the best ideas bubble up,” Evans says. “It's a race for the best ideas to connect emotionally and meaningfully with clients.”
At spring training in Florida last year, an advisor Evans knows took a prospect from Philadelphia to a Phillies game. The clientologist on his team had arranged not only great seats for the pair but for the prospect to throw out the first pitch.
“Success is not who you know but who knows you and what they are saying about you when you’re not in the room,” says Evans. “Is there anybody on planet Earth that that client is not telling that story to?”
2. Foster Collaboration
Many advisors talk collaboration, but they don't practice it. Yet when it's clicking, the client is so much better served, according to Melissa Mitchell-Blitch, who heads Eredita, a consulting firm in Charleston, South Carolina.
“Most advisors do not collaborate. Having worked as a financial advisor in a wealth management firm, I know we communicated. I can't say we truly collaborated,” she adds. “One of the greatest barriers is our ego, our desire to be the trusted advisor who champions our own recommendations and ideas.”
Instead, Mitchell-Blitch recommends bringing key advisors together—not just the accountant and attorney but trust officer, banker, psychologist, business coach—on a routine basis to share ideas and information about the client's financial and non-financial objectives. Once or twice a year, key advisors should meet in person to assess priorities for the following six to 12 months.
“Innovation occurs as a result of collaboration,” says Mitchell-Blitch, dean of collaboration for the Purposeful Planning Institute. “It allows you to look at something from a different angle. That's where creativity takes place.”
3. Focus on Family
Many advisors today still have an exclusive relationship with the male head of household, ignoring the spouse and heirs. Yet 70% of surviving wives ultimately leave their husband's chief advisor, according to Matt Halloran, president of Top Advisor Coaching in Portage, Mich.
“You have no relationship capital with the spouse because you’re only talking to the husband. It kills me. Not only that, advisors are not paying attention to the kids or heirs at all,” Halloran says. “You have to create the situation for that to happen.”
Halloran suggests holding a multi-generational family retreat as an opportunity for grandparents to pass down wisdom about money and life. During one recent family conference he arranged, the grandparents, tears in their eyes, said: “How come nobody has done this for me before?” The next week, one of the adult children parked $800,000 with the advisor who hosted the meeting.
“The problem is people think only the wealthy have the capacity to do this. I believe it needs to be done with everybody,” he added. “For a middle market advisor, this is a great way to run a very sustainable business.”
4. Create a Culture
As a small firm, Vista Capital Partners in Portland, Oregon, had that special something that kept employees happy and clients close. CEO Doug Johanson wants to make sure it stays that way.
Last year, he produced an internal document called the Culture Project that puts into writing what matters most about Vista's company culture. The document was created in collaboration with a four-member culture committee. Among its bullet points: The desire to feel part of something bigger. Getting the right people on the bus. Pick one thing and be great at it.
“At first, culture kind of happens, based on the founder's vision oftentimes. After a while, it's important to define it and purposefully cultivate it,” says Johanson, whose firm has 17 employees and, after just 14 years, manages $900 million in assets.
“Our clients, when you ask why they hired us, talk about the feeling they had when they walked through the office: the energy, the people, the personalities, the passion. Some of it's hard to put words around,” he adds. “You just feel it in your gut. We want to ensure that we keep that mojo going. When you attract, retain and motivate the best people in the industry, the client is the direct beneficiary of that.”
5. Think Small
Barnaby Riedel's advice? Don't think big but small when you consider your client relationships.
“Think within that same framework as you think of your normal relationships. What surprises and delights you about your best friend? That she checks up on you with no ulterior motive? That she values you as a person? What are the virtues that we keep coming back to over time as fundamental to good quality relationships? People use these small things to judge whether you can handle the big things,” says Riedel, chief research strategist for Riedel Strategy in Newport Beach, California.
It's often the little things, he adds, that make the client feel cared about not just as an asset, but as a person. Manners and etiquette also matter.
“Dressing well is a reflection on your character. If you take care of yourself, you can take care of others. If you are careful with your words, you are probably careful with other stuff too,” he said. “The tendency is to think big and think grandiose and think large, our recommendation is to think small—to think about these micro interactional details, the small ways in which we reveal our character.”
6. Manage Expectations
From the start, the advisor needs to set expectations around client communication—and remain consistent going forward.
“Advisors struggle with this. You need to set an expectation upfront regarding routine communications and how you are going to communicate when there is an event like market volatility or an event in a client's life,” says Matt Lynch, managing partner of Strategy & Resources in Dayton, Ohio. “Advisors do a really good job of this in the early stages of the courtship and then they begin to take their clients for granted. The firms that experience exceptional sustained growth are those that intentionally set up a process for the care and feeding of clients.”
Basically, the advisor needs to build a service model or process around the promise. With technology, Lynch adds, it's not all that difficult.
“If I say we’re going to meet in person once a year and have a 30-minute call each month or quarter to talk about what's going on—if I do that—then I’m probably doing a pretty good job of building relationship equity with the client. I’m delivering on what I promised,” he said. “It's not that they need to ramp up the frequency of contact or change the way they deliver services, it's just more about setting the right expectations upfront.”
7. Rethink Referrals
Many advisors put this tagline at the end of their correspondence: Referrals are your best compliment. They shouldn't.
“It's off-putting. I’m putting all the pressure on the client to come up with someone and that puts pressure on the relationship,” says John Anderson, managing director and head of practice management at SEI Advisor Network. “You need to put pressure on you not them.”
Anderson recommends following this four-step process. First, ask: Am I referable? Do I communicate well with clients? Do I show value? Am I transparent? Do my appearance and office convey my professionalism? Next: Do I have a value proposition? “This is foundational to what you do,” Anderson says. “If you can't describe what you do how do you expect your clients to describe what you do?” Third: Do I have a niche and do my clients know that they fall within that niche? Referrals should come naturally—unasked—when these steps are followed.
Step four: When meeting with your top clients, record the names of people they might mention such as “my brother John, an attorney” or “my friend Beth, a business owner.” Do some research. Find out if they would make good clients. Next time you meet with your client, ask for an introduction.
“It's as simple as saying ‘How about the three of us get together for a round of golf or drinks?’ Nine times out of 10, the client wants to help the advisor. You’re only going to do this with satisfied clients, the ones you are engaged with and the ones you want to replicate. This is the sort of thing that can actually deepen relationships.”
8. Add Value
Joe Lukacs, CEO and chief performance strategist of International Performance Group in Melbourne, Florida, has challenged each of his clients this year to ask: How do I add value to the client relationship?
In today's hyper commoditized environment, advisors who fail to add value face what Lukacs calls a structured risk long-term.
“If you took an advisor from 1990 and teleported them to today they would say: What business are we in? Technology speeds up the evolutionary process. The portfolio manager-centric advisor is in a real dogfight,” says Lukacs. “The people-centric advisor needs to do everything the portfolio manager does with add ons: touch base phone calls on a regular basis; regular educational or fun client events, live or virtual; adding experts like tour operators or business coaches. These all carry goodwill and goodwill capital is the future of the industry.”
Lukacs has a client in Alaska who starts each review with this question: How's your health? Others on the checklist: What's going on with the family? What's keeping you up at night? What's on the bucket list?
“You need to start thinking about what you can do differently. We live in a culture of coaching and therapy. Younger people are even more open to it,” he added. “Our business is going to be different as a result. The bar is going to rise.”