The recent launch of Profit Booster continues to attract a lot of interest and feedback.
This unique online tool offers business owners objective and independent insights as well as positive suggestions to further the "health" of their practice. It's also supported by a wide range of educational, thought-leading and research-based material.
The Profit Booster is simple, quick, informative and exclusive to Advisely members. Why not check it out?
While the Profit Booster quantifies the average profit uplift achieved by those firms who regularly seek feedback from their clients, Business Health’s CATScan client satisfaction research continues to show that "relationship" is the highest-performing key performance indicator of the nine areas we ask clients to rate their adviser on.
Verbatim comments further reinforce this idea: 91% expect to maintain an ongoing business relationship, while 87% are happy to refer. Happy days!
Not so fast, though.
In our experience, a quiet client isn’t necessarily a happy one. Unexpected or unforeseen "stuff" – whether it's a friend's health issue, negative media coverage of the profession or new, complex product styles – can sometimes intervene and create a moment for the client to pause and reconsider.
There will always be "things" happening in their lives and sometimes you have to listen very carefully to hear what's not being said.
You can't expect every client to stick around forever, of course. But if you're losing too many, it's a good time to assess your retention rate over the last 12 months. How does it compare to the previous year?
Remember that losing clients is the lag indicator. If you want some lead indicators that clients might be at risk, consider the following:
Early warning indicators that your relationship could be called into question
The first sign is waning enthusiasm. Do you have clients who are:
- Not following through on what they committed to do?
- Tardy when returning your calls, emails or requests for information?
- Pulling out of agreed meetings – in person or virtual?
- Not opening your communications?
Next, how do you feel about it? How do you think the last meeting went? Did you feel good about it, and did they? Did you lock in a time for the next meeting – and are you looking forward to it?
Expanding this further, how do your staff feel? They're invariably the first point of contact for clients, so have they detected any negative signs?
If you're having trouble assessing, the client's "vibe", consider: are they still happy to refer you to their family and friends? What are your referral and conversion rates?
Finally, and this is a big one: do you know the kids?
Most of the research we come across suggests that upon the death of one of their parents, the kids intend to move their parents’ assets away from the adviser. This finding has only recently been reinforced by research from Natixis Investment Managers, which reported that 45% of advisers are concerned that they won’t retain assets from client’s spouses or children following a transfer.
The perception (rightly or wrongly) is that the parents’ adviser isn’t known to them and probably isn’t a good fit. Seems a tad harsh, maybe, but it's their reality for now.
So, how do you address these problems and avoid any nasty surprises?
Seven of our favourite tips for maintaining client relationships
Note that, unless stated otherwise, any "fact" item is derived from Business Health research.
1: Set (and exceed) client expectations
On becoming your client, most won’t know what to expect from the relationship. What a wonderful opportunity this presents for you to lay down the ground rules, set out your service standards and address any questions they might have. Expectations are set and met.
And, as your relationship evolves over time, never assume the client knows what you’ve done for them over the last 12 months. Tell them, framing your relationship in terms of what you've done for them – how you've delivered value, in other words.
Fact: the average revenue/fee per client is $3,852.
2: Ensure the "R" in your CRM refers to "relationship"
There’s so much more to developing and maintaining a quality relationship than product holdings and investment performance.
To be truly effective, your CRM should capture the important relationship-building data about your clients – hobbies, community activities, children’s details, aspirations, dreams and so on. Critically, this information should be maintained and updated on a regular basis.
Fact: only 4% of practices are holding 20 or more individual pieces of information on each of their key clients. A third (35%) still store fewer than 15 data points, and quite often it's the more personal, key relationship-building information that's missing.
3: Communicate
Our research consistently shows that frequent, meaningful and personalised communications will deepen and enhance every client relationship. And while "communication" incorporates meetings, newsletters, social media, video and events, our view is that there's an important place for "face-to-face" – both through in-person meetings and unprompted "how's things" calls.
Fact: 27% of Australian practices contacted their clients on at least ten occasions in the last year. These firms were achieving a 43% higher level of profitability (boost).
4: Make the review meeting impactful
The review meeting is the one occasion during the year where you control the narrative. You can reassure and advise the client of the progress to their goals and address any issues they might have.
In 39% of firms, at least one other person (beyond the adviser and client) sits in on the meeting, while 80% of firms report that the average time for a review meeting is between two to 2.5 hours hours.
Fact: reviews are the poorest performing area as rated by clients through Business Health’s CATScan service. There's a big missed opportunity here.
5: Ensure your range of services are compatible and aligned to clients' evolving needs
There’s no need to dwell here, but as Australian clients continue to grey, accumulation, saving and protection needs are gradually morphing into retirement, annuities, estate planning, health and aged care. And yet, only 24% of practices plan on expanding their suite of services in the coming 12 months.
Fact: "range of services" has been steadily falling down CATScan’s KPI satisfaction ratings. It's now the third-lowest in the group.
6: Track your lead indicators
There are a number of indicators that will give you an early "heads-up" regarding the quality of your client relationships. These include referral and retention rates, client satisfaction levels, number of client contacts and client "value-for-fee" metrics.
Track your trends over time and perhaps look into building these indicators into staff job descriptions, annual objectives and incentive programs.
7: Feedback - get it, listen objectively and action as necessary
In our view, it would be highly presumptuous to assess the quality of any client relationship without seeking the input and feedback of the client themselves.
We believe that this feedback should be regularly sought from all clients. In addition to a general satisfaction survey (conducted every 18-24 months), there are several other important events which trigger a survey:
- within one month of coming on board or leaving the firm
- after a client review or special event (such as a seminar)
Crucially, you need to taken in this feedback with an open mind – and act upon it, where appropriate.
Fact: one in four practices (26%) are seeking feedback from their clients, with most of these being conducted internally by the business itself. Practices who actively employ an independent third party to undertake these client surveys are achieving a higher level of profitability (a 91% boost).
We hope this piece encourages you to continue to proactively monitor the satisfaction levels of your clientele, taking nothing for granted.
For your consideration.
Advisely Partner
