Financial advisors often assume that their clients will mainly judge them on the criterion of investment performance. But research shows that when affluent clients fire advisors, 87 percent of the time it’s because of a poor service relationship. Only 13 percent of the time is it because of poor investment performance.
The irony here is that advisors tend to worry too much about something they have relatively little control over — investment performance — and not enough about the service and relationship factors that they do have control over. You can do your best to make sure that your clients’ portfolios are properly asset-allocated while you work hard to create alpha, but in the big picture there’s little you can do to affect the cyclical nature of investment markets.
That’s why it’s so important to keep the focus on your clients’ overall needs and how to satisfy them. The psychologist Abraham Maslow established that human beings have a hierarchy of needs, with physiological needs like food and shelter at the bottom, and self-actualization needs (striving to become all we are capable of becoming) at the top. Until someone’s more basic needs are satisfied — until they are well fed and sheltered — they rarely turn their attention to loftier goals.
Similarly, as the chart shows, affluent clients have a hierarchy of needs that begins with relationship satisfaction. Next is service satisfaction, and then finally wealth management satisfaction (including but not limited to investment performance).
A client dissatisfied with his client/advisor relationship might not stick around long enough for service satisfaction to become an issue. Similarly, without service satisfaction, good or even great wealth management probably won’t keep your clients happy. So first make sure you build strong relationships through frequent personal contact, a consultative style and attentive listening, and then make sure you’re regularly delivering WOW service to your clients.
Seven WOW Service FactorsA heartfelt “WOW!” is the exclamation we utter when someone delights, dazzles or astounds us with something above and beyond our previous experiences and expectations. At its core, WOW service means raising the bar so that your affluent clients have a world-class experience every time you or your team touches them. WOW service not only makes your clients say “Wow!” to you, but has them saying “Wow!” about you to others, including potential referrals.
CEG Worldwide’s research shows that seven key factors determine whether your clients will feel they’re receiving WOW service:o Competence o Hustleo No surpriseso Warmtho First-to-knowo Listeningo Client-centered orientation
The competence factor refers to your core competence in managing money and investments (including outsourcing any parts you otherwise wouldn’t be competent at). This factor is something that most clients assume — a kind of “table stakes” — because why else would they come to you, a financial advisor, in the first place?
Somewhat surprisingly, however, many clients have a competency concern as to advisor confidentiality. Make sure that your policy and procedures manual explicitly states that employees talking about clients outside the office is grounds for termination, and that everyone you work with knows this. Inform your clients of your strict policy and procedures, and stress that you’ll always hold their dealings and information in strictest confidence.
The hustle factor encompasses perceptions of your reliability. It’s enormously important that if you tell clients you’re going to call them back, or do something in a certain timeframe, that you actually do so. It’s not that hard to always do what you say you’ll do, or if there’s a problem, to immediately communicate by phone about the situation. It’s also critical to be perceived as being a perfectionist. How do your office and desk look? How do you present yourself? Are there errors in the reports and communications you deliver? If you find a mistake or a problem, do you quickly take ownership of it and get it fixed?