Posts Tagged ‘Leaving Today’
Wednesday, April 4th, 2012
Most advisors recognize that clients are unhappy with returns in the last decade, but believe that their clients are satisfied with communication and the relationship as a whole.
That’s why three recent conversations with both investors and advisor should set off alarm bells.
Three causes of client defection:
In my 25 years working in the investment industry, I’ve had numerous conversations with advisors and investors about what makes clients leave. Sometimes it truly is beyond an advisors’ control; markets underperform, clients have unrealistic expectations, or feel they can save money investing on their own. And sometimes clients are won over by a sales pitch from another advisor who shot the lights out.
But often the issues that cost clients fall into three categories that are absolutely within advisors’ control:
The first of these relates to communication.
A recent article described a conversation with clients thinking about switching because they weren’t getting updates between annual meetings on market developments, leading them to wonder whether their advisor was actually on top of what was happening. Other clients complain that they never hear from their advisor, unless they initiate contact or that when they meet their advisor dominates the conversation.
Another set of issues within advisors’ control that damage relationships and can cost clients hinge on responsiveness; and clients feeling unimportant or unappreciated.
Last fall, I wrote about clients who left because their advisor hadn’t responded to requests for a comprehensive financial plan. Other clients have talked about advisors failing to respond to questions in a timely fashion, or things like change of address that drag on without resolution.
A third cause for clients leaving today is the sense that their advisor is too passive in recommendations to make changes to their portfolio. In markets like we’ve seen of late many clients want to feel that their advisor is actively looking for better opportunities. I recently talked to an advisor who lost a half a million dollar client and asked his branch manager to call the client to get feedback.
“I liked working with John,” was the response from clients, “but all we’ve heard for the last five years is to be patient and hang in there. Given everything that’s gone on, it’s hard to imagine that the portfolio that made sense five years ago still makes sense today.”
On this last issue, it’s not that you can’t recommend that clients stick with their portfolio, but understand that today many clients are looking for their portfolio to be actively managed; if you’re recommending a status quo approach you have to take time to demonstrate that you’ve looked at all the alternatives, and that this isn’t simply the path of least resistance for you.
“What we have here is a failure to communicate”
Let’s be clear here: The big problem isn’t client unhappiness with communication, responsiveness or proactive advice. The problem is that in many cases advisors are oblivious about these satisfaction gaps and only learn about them when clients leave.
In the words of the warden in the Oscar winning 1967 film Cool Hand Luke: “ What we have here is a failure to communicate.”
There are a number of ways to open the lines of communication with clients.
A recent article described the Net promoter methodology to measure client satisfaction and loyalty:
Last year, I wrote about questions that will get clients to open up about how they really feel. One of the best ways to get feedback is with the simple question: “What one thing could I do to improve your experience working with me and my team?”
You can hire one of the firms such as Advisor Impact that conduct audits of client satisfaction.
Or you can participate in a groundbreaking research study I’ll be conducting this spring in conjunction with Professor Tanjim Hossain of the Rotman School of Management at the University of Toronto.
How the study will work:
The study is designed to provide clear feedback on how to improve your client meetings and your client relationships generally. At the beginning of meetings, advisors will tell clients that they’re participating in a research study to maximize the value of meetings for clients, conducted with the Rotman School of Management at the University of Toronto.
At the end of the meeting, clients will complete a confidential written survey which they’ll put in a stamped envelope and mail. While clients are answering the written survey, advisors will be at their desks completing parallel questions. Notably, one client who completes the survey will win $5,000.
What you’ll get:
Participating advisors will receive:
- An analysis of what clients think of the value from your meetings and guidance on how meetings could be improved
- Feedback on your overall client satisfaction level
- Identification of gaps between your view of client satisfaction and what clients actually say
- An overview of the barriers to your clients providing referrals
- Where clients give us permission to share their names, specific feedback from individual clients
Plus one advisor will have the chance to call a client and tell him or her that they’ve won $5,000.
The study is being run over eight weeks, with the time commitment for the typical advisor about ten minutes per week.
1. More details on how the study will work: Client Meeting Study Summary–Click Here
2. A link to download a 15 minute conference call describing the study: Research Study Conference Call Recording–Click Here
3. A copy of the draft questionnaire for clients to complete: Sample Investor Questionnaire–Click Here
Here’s the link to sign up for the study: Register Here
Tags: Alarm Bells, Annual Meetings, Change Of Address, Control Markets, Conversations, Defection, Drag On, Gaps, Hadn, Investment Industry, Last Decade, Leaving Today, Market Developments, Recent Article, Relationships, Responsiveness, Sales Pitch, Satisfaction, Timely Fashion, Unrealistic Expectations
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