More advisors should consider doing client surveys.

By David J. Drucker

    In a business whose members clamor for any tidbit of practice management guidance that might help them be more efficient and more effective, it's amazing the client survey hasn't become a prime management tool.
    "Client surveys are one of the most underutilized devices by advisors. Tiburon studies have shown that client referrals account for more than 50% of all new clients in the advisor industry. Why would advisors not invest in asking for feedback? We see that less than 2% of advisors do a systematic client survey," according to Chip Roame, managing principal of Tiburon Strategic Advisors.
    Says Gregory Harris of QMR Market Research: "The most common objection I hear is that independent advisors have enough going on just reacting to clients' needs." In other words, most advisors are too busy to conduct a survey? "Most advisors react to changes in the industry. Conducting a client survey is a proactive move," he says.
    In 2003, Harris developed a client survey tool, qFINANCE, that became a QMR offering when he merged his activities with that firm. qFINANCE ( is a third-party tool advisors can use to help them measure the "health" of their client relationships. "Only by tracking the full dimensions of performance-as seen through the eyes of the client-can advisors build practices that advocate client needs," asserts Harris.
    Most advisors, if they've been around a while, already believe they know what their clients think of them and their services, says Harris. Or they think that if they conduct a survey, they'll set up certain expectations in the minds of their clients that will require them to work even harder. Says Harris, "It usually takes some critical event, like losing a really large client, to jar an advisor into action."
    In all fairness, though, advisors may be "survey-challenged" by their broker dealers' restrictions. "Some advisors say their B-Ds won't let them do a survey," says Roame, "I guess the B-Ds are afraid of documenting bad feedback." "And if the advisor does the survey correctly by using a third-party survey company," adds Harris, "B-Ds will sometimes object to that third party having access to client information."
    But if you've got a level of independence that allows you to conduct a client survey, and you're truly conscientious about meeting your clients' needs, then it's time to face the music. The only question is, how will you do it?
    Those brave enough to ask for client feedback-including criticism-have employed various strategies with success. First, there are those who have heeded Harris' advice and employed a third party to conduct a survey for them. The qFINANCE survey process is representative of what many third-party firms will do. "It's a turnkey, outsourced process," says Harris. "We're going to reach out to your clients via e-mail and paper with a standard, 38-question survey divided into eight categories."
    QMR carefully researched the question of what attracts clients to advisors and found both tangible (frequency of communication, investment performance) and less-tangible (competence, trustworthiness) answers. Finding some qualities tricky to measure, Harris developed his standard assessment to collect data for the advisor that he can analyze online using QMR's proprietary tools. "The data collection process takes 30 to 45 days, we get about a 50 % response and, after we close the survey, we have a conference call with the advisor to coach him on identifying the opportunities in the client data-both for keeping existing clients and landing new clients."
    Bob Keats of Keats, Connelly and Associates Inc. in Phoenix, is one advisor who's gone the third-party route. "We did our first official client survey three years ago using Advisor Impact ( Advisor Impact sent a written questionnaire to our clients and collected survey answers at a separate address [from ours] so our clients could remain anonymous if they wanted."
    Operating under his current business model-fee-only comprehensive financial planning-since the early '90s, Keats doesn't know why he waited so long to start doing surveys, but he's glad he's now doing them regularly. "The information we've been able to glean from each of our surveys has been invaluable to us in seriously addressing the key con cerns or compliments our clients have with each area of our practice. Our latest strategic planning meetings focused on shaping our business processes, technology, client servicing and other practice issues all identified from the client feedback to our surveys." Keats says it's all been well worth the $5,000-plus his firm spent, and they'll now survey clients every two years.
    Yet, not every advisor who wants to do a survey feels it's necessary to employ a third party company. Frank Moore of Vintage Financial Services LLC in Ann Arbor, Mich., has conducted a survey almost every year of his 21 years in business, but he does them himself. "The surveys we do are typically only one page ... I think keeping them short is important. We get feedback on services that we may offer. We'll typically ask several multiple-choice questions, many of which require just a 'yes' or 'no' response. We also ask some open-ended questions that may go unanswered, but still give clients a chance to mention concerns they wouldn't otherwise bring up with us."
    Does Moore's do-it-yourself approach hamper his results? It would be hard to know if his clients are divulging as much of their true thoughts and feelings as they would if approached more anonymously, but Moore's response rates are on par with those of third party-conducted surveys. "We typically hear from 40% to 45% of our clients although, since we became fee-only and jettisoned a lot of smaller clients, the rate has gone up to [as high as] 63%."
    Stephen Brody of Greenville Financial Advisors in Greenville, N.C., takes an approach that breaks all the rules. Not only does his firm do its own surveys, it does them in person. "I was in practice about 12 years before we introduced into the practice the idea of client surveys. We've taken a different approach, viewing surveys as 'research interviews.' We meet with our best clients for a structured, one- to two-hour meeting to address specific questions that let these clients know we want their help to continually upgrade and refine our offerings so we can meet or exceed their expectations."
    Brody said that as a result of his firm's research interviews, it has made many changes that are shown to clients. "Many clients are floored that we really listened, and the process acts as a catalyst for them to grow closer to us and the practice," he says. Both Brody and Moore say the fact that they've taken the time to solicit and listen to client input has lead to valuable referrals from their clients.
    Brody and Moore would probably say the survey process doesn't have to be expensive. Of course, if you don't lay out the dollars for a turnkey method, you'll still put in your own time, and probably more of it. Yet, that shouldn't deter you, says Ronald Harczak, a St. Charles, Ill. advisor with Securities America.
    "A client 'fired' me in late 1998 but, for some reason left a $200,000-plus account in place with instructions that I was not to call them or recommend how they should manage the account; they were going to manage it themselves. I continued to keep them on my mailing list and they recently responded to my client survey request!"
    Harczak says these clients sheepishly admitted they were wrong in managing their own assets over the last six-and-a-half years and asked him to meet with them to review their entire portfolio. "After several meetings, they asked me to manage their assets without their oversight or input. We have now transferred over $500,000 of new assets into our fee-based program and expect them to be long-term clients." Harczak says this single client has more than paid for the cost of his survey.
    While some broker-dealers may discourage or simply not permit client surveys, Harczak was encouraged to conduct a client survey by Laurie Burkhard, one of Securities America's practice management consultants. "We contracted with a third party recommended by Securities America. After all the results were in, the third-party contractor provided me with a very detailed analysis of client scores and answers, as well as editorial comments highlighting highly sensitive or time sensitive issues mentioned by clients."
    One of his action items was a common response many veteran advisors receive from client surveys: clients wanted more frequent contact from Harczak's office. "We've since taken steps to systematize the client contact process and expect to survey our clients again in 2006," he says.
When should you survey your clients if this isn't a practice management tool you've used before? There's no time like the present, as they say. And how often should you do it? Smart advisors seem to be surveying every year or two, but I can see where the clients might find this tedious after a few years ("Look Hon, here's so-and-so's survey." "Again? It seems like we just filled that out last month!")
    Roame suggests a different and perhaps less intrusive approach: "If I were an advisor, I would have a third-party firm call ten of my clients every month, seeking feedback and keeping it anonymous, unless the client asked for follow-up. One of the questions would be, 'Would you make a referral to your advisor?' Not to seek a result right there and then, but to clearly institutionalize the expectation."
    The irony is that some advisors fear clients may leave if asked to focus squarely on the relationship, whereas what usually happens is that clients feel more cared for when asked for their opinion. 

David J. Drucker, M.B.A., CFP, consults with other advisors as president of Drucker Knowledge Systems. Learn more about him at .