The Satisfaction Gaps that Cost You Clients

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:

The Ques­tion that Pre­dicts Cus­tomer 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.

Addi­tional information:

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

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