One of the opportunities presented to advisors by the unsettled investment climate is client communication—how, when and what to say to clients. Most clients welcome information—on portfolio performance, potential investments, fees, market activity—but may rank the quality of advisor interaction higher than its length or frequency.
The latest AdvisorBenchmarking survey revealed the growth in more personal approaches to providing investment advice. Advisors reported they were spending more time directly with clients, whether in person or over the phone, while less-personal methods showed erosion. The use of telephone calls to clients, for example, nearly doubled from 51% to 96% in the past couple of years, while the occurrence of in-person meetings increased from 59% to 93%. Newsletter use, a more impersonal way of keeping in touch, dropped to 50% from 74%.
The trend toward more personal forms of communication accelerated after the market crisis and subsequent recession, as advisors realized clients appreciated more “high-touch” communication when markets were undergoing turmoil. Advisors spending the most time with their clients are often in a better position to demonstrate their investment knowledge and convey their value, which may help strengthen relationships, increase referrals and boost assets.
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Indeed, clients are generally more comfortable and more prone to continue a relationship with an advisor who can integrate the financial and personal dimensions into a practice—who can understand and address a client’s financial situation and attitude toward money, and do so with insight and discretion.
That is not to say that advisors and their clients ignore more high-tech communications. About 47% of AdvisorBenchmarking respondents said they either use or plan to use social media in coming months. The main reason they give for not using social media is not its impersonal nature but their uncertainty over navigating compliance issues (47%) and their inability to measure social media’s effectiveness (27%).
Advisors may also find it difficult to quantify how much and in what ways social media helps the client-acquisition process. What they do know is that it takes time. Lacking staff to manage and maintain a social media presence showed the largest increase in our latest study of the reasons RIAs do not use social media.