Danger & Opportunity: Service Excellence--The Advisors' Take

Like the weather, everybody talks about service. But what actually constitutes good service, and does the definition change if you’re offering it to clients in these challenging times, or getting it from your partners? In a roundtable conference call with three seasoned RIAs in late May, I asked them those questions. While they all custody at Schwab Institutional (Disclosure: that company facilitated the conversation, though Schwab did not vet the questions nor shape the answers), in typical RIA fashion they spoke openly about their frustrations and their triumphs.

For Carol Benz, a principal at Bingham, Osborn & Scarborough in San Francisco, “our ability to track and measure our service delivery” is based at first on establishing what the client’s expectations are, then making sure all team members know those expectations. While Bingham, Osborn is planning on implementing a new CRM system to track service performance more effectively, for now “the main tracking device we use is client retention. We’re very particular in reviewing client departures, why they may be leaving us, and measuring those departures by both AUM and numbers of clients, year over year and over longer periods of time.” Whether it’s technology or client retention, however, Benz argues that “the best tool to ensure the good delivery of service to clients is hiring the right people who are going to live and breathe the model.” While Benz says there are “certain qualities in the service person that must be inherent,” if those people are “not the right fit, no kind of metric is going to solve the problem.”

Colin Higgins says the Golub Group, the San Mateo, California-based firm where he serves as president, implemented a CRM system nine months ago that has made a “big difference in allowing us to track the metrics” of client service, including “the points of contact.” The new systems “has allowed us to track which of these contacts is proactive, and which is reactive. We’re trying to focus on being as proactive as possible. Looking at the first quarter of the year, 65% was reactive due to the market turmoil, and only 35% was proactive,” though with the tempering of volatility in the markets since early March, Higgins says “we’re back to a 60%-40% proactive split.”

Even with the new CRM system in place, Higgins agrees with Benz that “the key is having the right people, the right culture, the right incentives in place. We compensate our entire team on retention” of clients, he reports. Moreover, when it comes to the people issue, Higgins says “it’s the little things that matter,” like answering the phone “on the first or second ring.” He quickly notes that the Golub Group does have a voice mail system, “but it only goes on after hours.” In the end, he says, “we want to treat our clients the way we would expect to be treated: in being proactive and responsive.”

For George Young of Villere St. Denis in New Orleans, his firm sends out individualized quarterly letters to each client. That helps to “preemptively address their concerns.” However, Young recalls that “culminating in mid-February,” perhaps 10% of his clients were “demanding an inordinate amount of time, and we explained to two or three of them that we couldn’t continue to service them.” He argues that to provide good service to all your clients, it may be necessary to decline to spend too much time with a few. “If your clients are unreasonable,” he says, “you don’t need to keep them. It usurps a lot of your time from serving the clients who have placed confidence with you wholeheartedly.”

How Much Is Too Much?

What is the right balance when it comes to client communications? Benz’s firm found that during the worst of the crisis e-mail alerts were good for some people, while others might have thought it was too much. What was “very useful,” she says, were Webinars and conference calls “where we invited clients to attend; those who didn’t wish to could refer to it later on our Web site.” Higgins argues, however, that “you cannot over-communicate in a market environment like we just went through. Those who value that will tell you so, and those that won’t will, too.”