The “client experience” has now moved to the top of what advisors should be thinking about in growing their practice. As it’s often pointed out, clients now are used to the experiences they get with companies like Amazon and Apple and expect it elsewhere. For advisors, this may mean rethinking how to group clients; adding more direct touchpoints, especially for the next generation of clients; and adding financial planning to the mix, according to a new report by Cerulli Associates.
In the study, Client Connections: Built on Trust, Nurtured by Strategy, Cerulli found having “a robust client experience strategy will become increasingly important for investor acquisition and retention.” This includes creative client segmentation, intergenerational engagement, client recognition and appreciation, and the development of a “holistic” client perspective, the report said.
The report states that “prioritizing the client experience requires a strategy. Not only do experience-centric practices go above and beyond to make clients feel special, but they have a strategy in place to reliably deliver a repeatable, consistent experience.”
How can advisors tap into this strategy? There are four ways that Cerulli outlines as components and their impact drivers:
1. Creative Client Segmentation
It shouldn’t be a surprise that technology is the key to helping form client niches.
“Nearly 60% of experience-centric practices use technology to automate client interaction, which includes building personas, helping advisors draw a direct connection between the client’s perspective and the approach they prefer,” said Cerulli research analyst Marina Shtyrkov, in a statement. “By segmenting their client base into client personas, advisors can automate workflows and optimize engagement opportunities.”
This segmentation could be as simple as job function to as deep of a dive as divorced women. The key is to determine the factors that describe a persona that help advisors link a client’s perspective, such as needs, values, lifestyles and the approach they prefer, such as communications style, and events.
Cerulli recommends that templates be created that request the intangible segmentation, such as hobbies, life stage, etc. and the tangible, i.e. account size, net worth and age. Broker-dealers and custodians can help with these tools, the research paper noted, adding that “a more robust firm-wide data set is also beneficial for BDs because it enhances artificial intelligence and predictive analytics projects.”
2. Intergenerational Engagement Through Team Structure
With a large percentage of advisors retiring in the next 10 years, many clients may move their business, especially client heirs. The Ceruilli report states that “experience-centric practices report less involuntary attrition when compared with all advisors.”
One way to curb this attrition is to develop “hierarchy teams” that have several layers of advisors, including junior advisors. The study found that 60% of multi-leader teams have said they built stronger relationships with beneficiaries of clients through this method.
3. Recognition and Appreciation
Although advisors hold larger meetings, or “appreciation events,” the Cerulli report notes that “experience-centric practices focus on the kind, unexpected gestures that engender joy, trust and loyalty.” These mean more frequent and smaller gatherings. In fact, 27% of experience-centric practices host social events on a quarterly basis, compared with only 8% of their peers, states the report. Accordingly, experience-centric practices had 6.4 to 7 average contacts per year versus peer practices that had 1.8 to 2.3 average contacts per year.
4. Holistic Perspective
Moving beyond portfolio management to include financial planning “gives advisors a holistic view into the client’s financial and nonfinancial life,” the report found. In fact, 55% of advisors stated they plan to expand to this service by 2020, versus 33% that did so in 2013. Further, those advisors who offer planning services that target client needs dropped to 22% of clients by 2020, versus 47% in 2013.
Technology can help advisors to easily incorporate financial planning into the conversation with more clients, Cerulli notes. Technology can help them gamify the planning experience, modularize the planning process, offer planning tools across a complexity spectrum and adapt planning tools to an interactive, co-planning environment.
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