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Research sponsored by CEG Worldwide consistently shows that the single biggest driver of financial advisor success is client loyalty. Consider a 2005 study of 1,417 affluent individuals that used in-depth interviews and a variety of objective metrics to determine whether affluent clients were moderately satisfied, satisfied or loyal. The pie chart below clearly shows that client loyalty was substantially lacking overall, with only 13.8 percent of the affluent individuals studied falling into the loyal category.

The following table highlights the tremendous benefits that accrue to advisors with loyal clients. In the 12 months before the study, loyal clients gave their primary financial advisors over 16 times the amount of additional assets given by satisfied clients, and over 22 times the amount given by moderately satisfied clients. Similarly, loyal clients were nearly three times more likely than satisfied clients, and over seven times more likely than moderately satisfied clients, to give their primary financial advisor more assets to invest over the next 12 months. Finally, in the 12 months prior to the study, loyal clients provided almost six times as many qualified referrals as did satisfied clients, and 118 times as many as did moderately satisfied clients.

Regular Contact Builds LoyaltySignificantly, the study also confirmed that a critical factor underpinning client loyalty is whether an affluent individual’s advisor embraced a consultative process, one based on a cooperative framework emphasizing both the quantity and quality of advisor/client contacts. The study’s loyal clients were asked how many contacts they had with their primary financial advisor in the previous 12 months — not how many they wanted, but how many they actually had. They reported an average of 24 non-investment related contacts, that is, 24 contacts not centered on their portfolios.

Many advisors in our coaching programs are startled when they first hear this number. They doubt they could ever make 24 non-investment focused contacts, and even question the wisdom of doing so. “I can’t imagine being in contact twice a month,” they say, “and have no idea what I’d talk to them about. And I doubt very much that they’d want to hear from me that often.” For many advisors this might be true — their clients actually wouldn’t want to hear from them this frequently — but that’s because these advisors only call their clients to talk about money, not about anything else of interest or importance to them.

How can you know what’s important to your clients so you can regularly contact them in ways that both you and they look forward to? And how can you make sure these regular contacts are actually building substantial client loyalty?

Again, it all starts with adopting a consultative style and process. In previous columns we’ve extensively reviewed the consultative process taught by CEG Worldwide, including the series of five consultative meetings that begins with the all-important Discovery Meeting. There, in order to discover what’s truly important to your potential clients, you ask insightful and meaningful questions that enable you to delve deeply into their goals, values, relationships and interests, as well as their assets, other financial and non-financial advisors and preferred work process. The information obtained during this meeting, if carefully recorded and made easily accessible — we recommend creating a Total Client Profile in the form of a visual mind map — serves as the basis for making the kind of non-investment related contacts essential to building client loyalty.

Your Client Relationship Management SystemOn the one hand, we have the end goal in sight: building client loyalty through a consultative approach including regular non-investment related client contacts. On the other hand, at the beginning we have the Discovery Meeting, where you uncover the information that serves as the basis for making these regular contacts. But to bridge the beginning and end here, you’ll need a client relationship management system.

Put differently, once you have the information from the Discovery Meeting, you not only have to make sure it’s regularly updated and easily retrievable, but you have to remember to actually use the information to make regular client contacts. The quality and quantity of desired contacts won’t happen by itself — you’ll want to designate a staff member as your client relationship management manager, or client contact chief, or some other appropriate title. It becomes this person’s job to drive client contact and to oversee client relationship management generally.

In today’s world, it’s hard to envision succeeding with these tasks without CRM (client relationship management) software. What you’re looking for isn’t merely an electronic rolodex, like Outlook. Instead, you want an actual relational database that will not only prompt you as to obviously important information (birthdays, anniversaries, hobbies), but that will also enable you to define fields and create unlimited groups (so you can easily identify clients interested in fly fishing or fine art and then notify them when there’s an event or news item).

Products available include Junxure, Act for Advisors and GoldMine, and in many cases larger firms provide advisors with proprietary CRM software. CEG Worldwide doesn’t promote any particular product, but we do feel that without such software it’s far more likely that your information won’t be easily retrievable, accessible, sortable or otherwise useful in triggering productive contacts. If the software you’re using has problems or limitations, you should provide feedback as to desired enhancements and capabilities to the vendor or your firm’s IT department.

The person designated as your client contact chief must become an expert in using the software, whether through an outside training course or hiring an on-site training consultant. Most people use only a small percentage of any given software’s full capabilities; they use a “quick start” tutorial to get things running, and then learn only a few additional functions over time, rather than ever coming to fully understand a program’s intricacies. Whoever is using the CRM software must know how to extract maximum value from it both in terms of making client information easily accessible and in terms of prompting the advisor to make the desired number of non-investment contacts.

Building Loyalty in Volatile TimesPeople who own great businesses do ordinary things extraordinarily well. Regular (non-investment focused) client contact is just such an ordinary thing, the importance of which is overlooked by many financial advisors.

Recent violent market gyrations have left both advisors and clients shaken. Many clients, including affluent clients, hear far too little from their advisors in such times, and as a result seek new advisors. While it may be understandable why many advisors want to hide from their clients when trouble strikes — feeling perhaps that they won’t know what to say or how to reassure them — this is exactly the wrong approach. Not only in times like these, but at all times, regular client contact builds loyalty and is the keystone of a great business.

Patricia J. Abram is a senior managing partner with CEG Worldwide in Florida; see


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