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Practice Management > Building Your Business

Getting Engaged

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If you surveyed your clients and 99 percent reported that they were satisfied with your firm, you’d probably be very pleased. However, according to a recent study, client satisfaction is not enough to build your practice. To really grow, you need engaged clients.

Julie Littlechild, president and founder of Toronto-based Advisor Impact, which is focused on helping advisors gather and use client feedback across North America and Britain, says an engaged client is a client who not only utilizes and appreciates the array of financial planning and investment management services you provide, but understands your unique market niche. According to Littlechild, the distinction between a satisfied client and an engaged client is best illustrated in the differences in how they make referrals.

Loyalty EconomicsAdvisor Impact’s report “The Economics of Loyalty” sets a new standard for client relationships, focusing on “engagement” rather than “satisfaction.”

To convert content clients to engaged clients, advisors must:o Gather more and better feedback on what clients value the most in the relationship.o Clearly define and quantify service standards for clients.o Implement a systematic process to review performance in meeting those standards with clients (e.g., an annual report card).o Assess your client review process to actively engage clients.

To leverage the commitment of engaged clients, advisors must:o Help clients to spot referral opportunities.o Clearly define and communicate the characteristics of your ideal client, including any minimum requirements.o Assure clients that you treat all clients in the same manner; ask for feedback and share the results.

“While both content and engaged clients are satisfied, almost all of the referrals come from the engaged clients,” Littlechild explains. “Furthermore, engaged clients are more apt to be concerned about an advisor’s ideal client profile. That is, when you get a referral from an engaged client, he or she has already qualified the lead and laid the groundwork by educating the friend or colleague about your firm and suggesting to your prospect how you might help them. More than simply handing out your business card, an engaged client generally relates a personal example, perhaps about an issue you have you’ve resolved for them — and that personal experience establishes a valuable connection.”

Littlechild reports these and other new insights in “The Economics of Loyalty,” a comprehensive study conducted by Advisor Impact with the help of Vanguard. To understand the economics of client satisfaction and the impact on advisors’ practices, Littlechild and her team surveyed 1,000 Americans, all of whom work with a financial advisor and contribute to or make the financial decisions in their household. (This was a carefully structured sample based on household investable assets, including a full sample with $5 million-plus.)

She presented findings in her keynote address at this year’s FPA Business Solutions conference held in March in Chicago. While a summary of the survey was distributed to journalists in April, the full report is now available to anyone interested (you can download it at on the industry insights page).

Not Just SatisfiedAccording to Littlechild, the findings presented in “The Economics of Loyalty” support her initial hypothesis that advisors can positively impact their firms’ profitability by moving clients along the satisfaction continuum to higher levels of commitment.

“While that statement may be intuitively obvious, the real challenge for advisors is to understand how to move the needle to push clients to higher levels of commitment,” she asserts. “It is at these higher levels of commitment, which we define as the engaged client, that the needs of the client and the advisor are most closely aligned because there is an overlap between satisfaction and profitability. Advisors can achieve a balance between a level of service that is both meaningful to their clients and profitable to them, but which also encourages clients to be actively engaged in the growth of the advisor’s business.”

Of the 1,000 investors surveyed for “The Economics of Loyalty,” 17 percent were disgruntled, 19 percent were complacent, 31 percent were content, and 33 percent were engaged. Importantly, 100 percent of the disgruntled had thought about switching advisors, whereas none of the investors in the complacent, content or engaged categories had thought about switching advisors. Yet, merely having clients stay put isn’t enough to increase business. In noting the differences between satisfied and engaged clients, the study provides a roadmap for advisors to transform their satisfied-but-passive clients into actively engaged clients capable of contributing to business growth.

Holistic AdviceFirst and foremost, Littlechild says an advisor’s action plan to move clients through to the highest level of commitment, and then leverage that commitment for practice growth, requires that advisors assess if they are delivering the kind of offer that is meaningful for clients. Engaged clients, for example, were more likely to use a broader range of services such as comprehensive financial planning, retirement income planning, tax planning, estate planning and trust services.

Significantly, among the most satisfied clients (rating a 10 out of 10), 52 percent said their advisor plays a coordinating role, acting as a quarterback compared to 19 percent of the least satisfied clients. Fifty-five percent said their primary advisor manages 75 percent or more of their investable assets compared to 18 percent of the least satisfied clients. And, almost three times as many very satisfied clients say their advisor works with their extended family.

“The relationship with the engaged client is defined by a higher degree of contact, a more holistic offering and a deeper personal relationship,” observes Littlechild.

Most significantly, the study found a clear and direct link between having a written financial plan and satisfaction with the relationship. Sixty percent of the most satisfied clients said they had a written financial plan compared to 27 percent for the least satisfied clients. In some cases, planning still plays a role even in the absence of having a written plan. Eighty percent of the most satisfied clients said their primary advisor provided comprehensive financial planning, and that dropped to 30 percent for the least satisfied.

Littlechild also stresses that it’s imperative for advisors seeking to grow their business to meet regularly with clients to discuss their financial plan. Only 6 percent of the most satisfied clients said they did not meet with their advisor in the last 12 months; that number jumped to 21 percent among the least satisfied clients.

“The study found that client engagement is not closely linked to the length of the client/advisor relationship, suggesting that commitment doesn’t just grow naturally over time, but must be built actively,” concludes Littlechild. “Because the economic benefits of moving clients into the ‘engaged’ category are too great to ignore, advisors have to do more than hope clients will move on their own. Advisors must intervene to create and leverage client commitment.”

Marie Swift is the president of Impact Communications, a marketing and communications firm for independent advisors; see


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