Advisers focusing
more time and energy on existing clients can help generate referrals, according
to YCharts data
Dec 19, 2019 @ 11:03 am By Sean Brown
For many financial
advisers, referrals are the No. 1 way to attract new business.
Though it may seem
backward, advisers might be better served spending more time and energy on
current clients. According to a survey of more than 650 individuals who work with a
financial adviser or planner, 88% said they consider communication style and
frequency before referring their adviser to family and friends.
The old model of
client engagement — annual face-to-face meetings and quarterly reports — is no
longer satisfactory. Three-quarters of respondents value their adviser's
ability to anticipate questions and contact them in advance. Additionally,
nearly two-thirds of all respondents said they hear from their adviser
infrequently.
It's clear that
outdated and ineffective client communications are a problem, but also an
opportunity for generating more referrals. Even if you've had previous success
with referrals, if you want to continue growing your business, it's critical
that you adapt to the changing times.
Where to start?
Overhauling your
firm's communication strategy doesn't have to be a burden. In fact, adopting a
process-oriented approach is the first step in further personalizing your
client touchpoints and building stronger relationships. Below is a list of tips
for how advisers can use communications as a differentiator:
1. Establish your
unique communications strategy. Take inventory of the communication
tactics that are working for you and figure out the holes. A few questions to
ask yourself: Are you prepared to reach out to your clients when a
market-related incident affects their portfolio? Are you sharing your thoughts
regularly on your blog, on social media or in an email newsletter? How do you
personalize communications for high-priority clients?
Think about it as a
two-by-two matrix: "scheduled" or "ad hoc" and
"personalized" or "broadcast." Being honest with yourself
about how you organize your efforts will help you identify gaps in the ways you
engage with clients.
2. Commit to a
rhythm for regular communication. You don't have to go from zero to
100 mph with your communications, but your clients should know when they are
going to hear from you on a regularly scheduled basis. Whether it's a monthly
update on their portfolio or key holdings, or quarterly strategy discussions,
your clients want to feel your presence.
3. When markets
move, reach out: Remember back in August 2019 when the yield curve between
two-year and 10-year Treasuries inverted and widespread panic followed? Events
like this are a perfect opportunity to showcase your thought leadership with a
visual-laden blog post or a quick update that explains your perspective and the
significance of a yield curve inversion.
Your clients value
your experience in these types of situations; it's likely one of the main
reasons they hired you.
4. Identify a
subset of high-value clients and test personalized outreach. Your most
important clients, such as those with the most AUM or most referrals, deserve
the highest level of service. One way to personalize communications with them
is with a monthly email that contains deep-dive research on their largest
holdings.
Giving insight into
why you recommend holding a stock, or why you suggest gradually reducing the
position over time, can inspire confidence in your abilities. See what type of
engagement you get from your key clients and progress your strategy over time.
It's all about
creating a better experience for your clients, and it starts with meeting their
communication expectations. If you're able to demonstrate your value to clients
on a regular basis, you might start to see those referral numbers rise and your
AUM grow.
Sean Brown is CEO
of YCharts, an investment
research, analytics and client communications platform.
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