What’s the best way to build client loyalty? We’ve found that advisors must have the following qualities to generate maximum loyalty:
Character — or integrity — is what clients look for first. Interestingly, while most clients have a low opinion of our industry generally, they tend to have a high opinion of their own advisors. This makes sense, because why would anyone choose and continue to work with a primary advisor whose trustworthiness, character or integrity was in doubt? Moreover, character tends to come into play and be tested only when times are tough — that is, there’s no such thing as “bad integrity” during good times. Character, then, is an attribute that you must have to even get into the game, and that you must continuously demonstrate when markets fall and panic ensues. Since you really can’t “fake” character, it’s important to make trustworthiness, honesty, and integrity an ever-deepening part of who you are as an advisor.
The second quality is chemistry, the connection that people either do (or don’t) have with each other. Chemistry either happens or doesn’t — you can’t force it. Chances are that if you wake up sweating over a client in the middle of the night — if you are worried about them because your attempts to effectively communicate about some ongoing issue have failed — then chemistry is probably missing. And if chemistry is missing, consider whether it even makes sense to keep them on as a client, because it’s unlikely that you’ll ever be able to gain their loyalty.
Caring is the third quality, and includes not only knowing the client’s goals and objectives but diligently working in concert with them to achieve those goals. Caring, however, should not be confused with being a hugger or a toucher, since these external manifestations just aren’t part of everybody’s style. Instead, caring is demonstrated by a client-first attitude and follow-up behaviors that clients perceive as showing that they really matter to you. Sincerity, like chemistry and character, cannot be faked, and most people can tell right away whether or not you really care about them.
Next comes competence. To be successful, financial advisors must demonstrate and communicate that they are extremely technically competent on everything from investment management to providing timely statements. There is a high bar here: Clients will automatically expect you to demonstrate unquestionable competence. Simply, they need to know that you know what you are talking about and what you are doing, or they’ll be gone quicker than you can say “Six Cs.”
The fifth quality is cost-effectiveness. Don’t confuse this with “cheap.” When questioned about this subject, loyal clients responded positively to the notion that “their advisors are not inexpensive, but are worth the cost.” Clients, especially affluent clients, are more than willing to pay for high-quality services. Ultimately, it’s a value proposition issue, not a dollar and cents issue.
The sixth quality is whether the advisor fosters a consultative approach and relationship. Clients want a partner, not someone who will tell them what to do or treat them in a condescending manner. A consultative relationship can only be built through a series of on-going, in-depth meetings where advisor and client work closely together to bring forth all essential client information, from assets and advisors to goals and dreams.
In addition to having a cooperative orientation — for example, only contacting your clients in ways they say it is OK to contact them — a consultative relationship requires making a large number of client contacts. Research shows that the most highly satisfied clients were contacted between 24 and 28 times a year, a majority of which were not focused on investments or portfolio considerations. You must know your client well enough, and have enough in common other than your business relationship, to make this number of contacts in an easy and non-strained fashion. A consultative relationship also requires customized communications: Off-the-shelf presentations and reports just won’t cut it (no less build loyalty) with affluent clients.
Ultimately, if you want loyal clients, you must excel in all six qualities. Ask yourself how you can build the systems and processes, and have the right people in place, to deliver to your clients a consistent client experience that builds loyalty — and that demonstrate that you, personally, are just the kind of person in whom loyalty is justifiably placed.
PATRICIA J. ABRAM is a senior managing principal with CEG Worldwide, a research, training and consulting firm.