The Affluentialist: Trends in Client Communication

Most wealthy investors of all ages spend time online each week, with more than 90% of those devoting at least one hour to working on financial activities, states a 2009 Spectrem Research finding (Communicating Effectively With Investors). Surprisingly, the study discovered that the 18-50 age group and the 51-60 group spent almost identical hours online. For those over age 61, however, many more didn’t touch a keyboard, but for those who did, half spent one to 10 hours online and 32% more than 11 hours (see Older and Online sidebar).

5. Compliance Concerns Prevent Many Advisors From Using Social Media

While some independent advisors have taken a running leap into the social media pool, many of the larger financial services firms remain extremely conservative about what they allow advisors to say. Once FINRA releases its upcoming new guidance on social media–especially the details about approvals prior to posting new content–the firms may relax some, but their concerns go beyond FINRA to include liability and branding issues, for example.

6. Communicating Proactively Means More Than Telephoning

Although many advisors added staff in recent years to service client needs, those employees with more experience in back-office tasks weren’t much help when the phones started ringing as the markets trembled. “Advisors realized they needed to do a couple of things as a result of the downturn at the end of 2008 and into 2009,” notes Joel Bruckenstein, publisher of the Technology Tools for Today newsletter (www.techologytoolsfortoday.com). Some advisors narrowly interpreted the advice from practice management consultants to have a lot of touches with clients to only mean making phone calls and sending letters.

While it’s important to remain sensitive to each client’s preferred communication channels, those preferences evolve, as the trend data above indicates.

7. Video- and Audioconferencing

Videoconferencing has recently taken off as a new communications tool, particularly by firms with high-net-worth clients. This tool can be especially effective with clients who travel often or live part of the year in other states. In the future if there is a market drop, for example, advisors would already have videoconferencing capabilities in place. Instead of making 50 individual phone calls, they would use e-mail and other means to invite clients to the conference. Advisors would also have the advantage of adding stronger visual elements, such as PowerPoint slides prepared ahead of time and whiteboard notations to illustrate key points during the online meeting. It’s also easy to record the sessions and post them as videocasts of the event on a Web site for viewing by other clients who couldn’t attend live–and for prospective clients wanting to learn more about a potential advisor. The recordings also provide advisors with the opportunity to review their presentation skills and refine them for the next conference.

8. A CRM System Can Drive Communications and Efficiency

While some advisors have aggressively pursued efficiency with new applications for unified investment platforms, financial planning, document sharing, customer relationship management, and secure Web sites where clients can download their statements, the majority seemed to be figuring which functions they need and how it all works together. Improving workflow and sharing of client data across platforms so it doesn’t need to be entered several times into different applications is the focus of many in the industry.

Customer relationship management (CRM) is one example for improvement of client communications where firms could find the technology that supports their relationship building. When all staff uses it with a clearly defined workflow, a CRM system would become the central repository for all client data, activities, task management, reports, and documents. Meeting notes, e-mails, phone calls, etc. would all be available. While the benefits may be clear, adoption has been gradual. At least one prominent firm with ultra-high-net-worth clients still uses spreadsheets as their “CRM system.”

At the Heart, Communicate

New technologies have played a major role in the growing number of independent advisors and in the transformation from commission to fee-based practices. When the old wirehouses no longer controlled the securities transactions–and the discount online brokers offered cheap trades–advisors moved to consultative client relationships to provide value. Today, even sole proprietors living in rural areas have access to sophisticated financial planning applications and retirement planning tools plus a full range of products on one platform from broker/dealers.

The most recent period of market turmoil has once again proven that regular client communication remains the heart of a practice built for the long term. When clients initiate most contacts or when advisors learn much later about major family events, the communication bonds aren’t strong enough. Technology can help.

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Lewis Schiff is the principal of Advanced Planning Group, a private wealth specialist for advisors and their clients and the author of The Middle-Class Millionaire. He can be reached at [email protected].