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Are Advisors Failing to Communicate? Many Clients Say Yes

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Do you have a failure to communicate with clients? With the compression in fees and now zero-commission trading as well as the rise of model portfolios, customers might be telling advisors something. In a new study, YCharts asked more than 650 clients of advisors and wealth managers what they thought about their advisors’ communication style and how they could improve.

Overall, clients weren’t very happy, with two-thirds saying their advisors communicated with them infrequently and one in four saying they were contacted “very infrequently.”

Could this be a function of account size? In comparing those with less than versus more than $500,000 in their account, 69% of smaller account holders said they are communicated with infrequently, while that number dropped to 46% of the larger account holders.

When asked if more frequent and personalized communication would give more confidence in their financial plan, 66% of those who cited being infrequently contacted said yes, they would have more confidence in their advisor-built plan, while 57% of those who were frequently contacted agreed. Across the board, 85% said the style and frequency of their advisor’s communication was considered when retaining them.

Personalize Communications

A majority of clients — 75% — stated that they preferred more relevant communication from their advisor that included articles and statistics directed toward their portfolio. A whopping 83% of those under 50 years old stated this preference, versus 65% of those over 50.

Email was the the big winner across all respondents for communicating. But there were differences in what advisors were sending. For example, for statistics, visuals or articles relevant to the client portfolio, after email, 33% of those under 50 versus 22% of those over 50 preferred text massages. About 26% of both groups preferred the info in a newsletter, while 25% of the younger folks preferred a phone call versus 19% of older people. In-person meetings were preferred by 30% of those over 50 and 24% of those under 50.

However, when it came to perspectives on market and economy, savings and planning tips or other financial how-tos, after email, the next preferred method was a phone call followed by face to face.

And when it came to referring their advisor, 88% of clients said it was dependent on their advisors frequency and style of communication.

Also, clients were asked their three most important factors in selecting a manager. The three highest ranked factors were:

  • Deep understanding of me and my goals (60%)
  • Customer service/communication (59%)
  • Portfolio performance (47%)

Twenty-nine percent ranked lower fees as a key factor.

Now what?

From the study’s findings, it appears advisors have some work to do to better engage their clients and improve personalized communications. Recommendations from YCharts include:

1) Commit to cadence: This means make a schedule of when to contact clients and via which method. For example, a blog post might work bi-weekly while a personalized email to high-value clients should happen every month.

2) Create new touch points and opportunities: Look at the communication gap as an opportunity to create ways to stay in touch with clients. Use new channels of communication, which will help you show how you stand out from your peers.

3) Determine how to service different clients: No doubt, your highest AUM clients should receive more service, and should get the most personalized communication. Other clients still should receive regular communications, and an advisor needs to determine what’s the best amount and most efficient means.

4) Understand your clients: Probably doesn’t need to be said, but this will help improve your service and no doubt help clients reach their goals.

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