To be successful, it’s vitally important that you put conscious focus on retaining your current clients, for three reasons. First, as people in many sales and service industries learn, it’s much more costly to find new clients than to keep existing ones. (This is especially true for financial advisors who, as this column recommends, target and serve clients fitting an ideal profile within a particular affluent niche.) Second, each client you retain and keep highly satisfied is a potential source of additional assets and referrals.
And third, given recent market turmoil, many (perhaps most) of your clients may already be thinking about moving some investable assets to another advisor or of moving to another primary advisor entirely. In late 2008, research by Prince & Associates showed that 81 percent of investors with $1 million or more in investable assets planned to take some of that money away from their primary advisor, and 86 percent of these investors planned on telling other investors to avoid their advisor!
Put all three factors together — the cost of finding new clients, the opportunity costs of losing existing clients, and the general dissatisfaction of so many affluent clients with both their advisors and their investments — and it becomes clear that retaining clients is absolutely crucial to success.
There are two key principles that can help you accomplish this. The first is to recognize that leaving client retention to the natural flow of things is a terrible mistake that will almost certainly result in the unnecessary loss of valuable clients. Instead, client retention must be a core part of your business planning, involving everyone on your team.
The second key lies in recognizing that client retention is a direct reflection of client satisfaction. CEG Worldwide’s studies and feedback from our coaching clients confirm that client satisfaction is something that can indeed be managed and improved.
The Six Cs
Our research has shown that clients rate or evaluate their advisors and their relationships with their advisors based on what we call the “six Cs”: Character, Chemistry, Caring, Competence, Cost and Consultative Relationship.
Character. When 1,417 affluent individuals were surveyed as to whether their advisors had integrity, only 74.6 percent of moderately satisfied clients believed their primary advisor had integrity, while 90.8 percent of highly satisfied clients said their advisors had integrity — a significant measurable difference in client outlook. The factors that these client described as being determinative of integrity included: whether the advisor does what she says she’ll do in a timely manner; whether the advisor is straight with clients, admitting mistakes and then quickly fixing them and reporting back to the client on the actions taken; whether the advisor is seen as being extremely reliable; whether the advisor is a perfectionist; and whether the advisor’s staff embraces and reflects these same attributes.
Chemistry. It’s not something that’s easily built. Instead, chemistry is an emotional connection that you either have or don’t have with someone. Like it or not, with some people you’ll immediately have a strong connection, with others it will be lukewarm and with still others you’ll find that you have virtually no connection or even a negative one. (If you have a negative connection with someone, it’s likely that you and they simply have conflicting personality types.)