Client-centered advisors have an edge over ones focused on investments.

Do you consider yourself to be a client-centered advisor? Not surprisingly, nearly every advisor does.

Undoubtedly you see yourself as a client-centered advisor, too. However, research from CEG Worldwide tells us fewer than 14% of advisors actually are. Only 14%! Instead of putting their focus on taking care of their clients, the vast majority of advisors-the other 86%-are more concerned with investments.

And so what? Well, two big things from the research jumped out at us: 1) Client-centered advisors did much better financially than investment-centered advisors. In fact, the numbers you will see later are staggering. 2) One overriding theme of our presentations is that financial advisors are in one of the most competitive industries in the world, and in competitive industries, you need an edge, a competitive advantage. To us, becoming a truly client-centered advisor was that edge, the best way to set yourself apart from your competition.

To find out if you truly are a client-centered advisor, you've got to start by being introspective and asking yourself some tough questions about how you really approach your clients. Start with the following five sets of questions:

How often you meet with clients. Do you encourage clients to meet with you on a regular basis (such as quarterly)? Or do you meet with them only sporadically?

How you spend your time. Do you spend at least half of your time with clients (in person or on the phone)? Or do you spend less than half?

How you see your most important role as a financial advisor. Is it most important to you to build your relationships with clients in order to be their trusted advisor? Or is it more important to provide the best investment products and services?

How you responded to September 11, 2001. Did you contact each client immediately to reassure them and respond to their concerns? Or did you avoid initiating contact until the crisis was past?

How often you receive additional assets to manage from existing clients. Do you often receive additional assets from current clients? Or almost never?

As you can see, there are two very different types of responses. If you generally answered yes to the first question in each set, you are clearly a client-centered advisor. On the other hand, if you answered yes to the second question, you, like most financial advisors, are investment-centered.

OppenheimerFunds recently completed a project with CEG Worldwide in which we identified the key characteristics that make advisors client-centered.

To start, it's important to understand exactly what distinguishes investment-centered advisors from client-centered advisors. In general, investment-centered advisors tend to be more technically oriented and focused on developing investment strategies, structuring portfolios, analyzing risk and studying the stock market.

Client-centered advisors, in contrast, focus strongly on developing client relationships. This is not to say that they are not concerned about investments-in fact, many client-centered advisors have substantial skill in managing clients' portfolios-but that they don't let investments take priority over their relationships with clients.

The best way to understand the specific differences between client-centered and investment-centered advisors is to look at their differing priorities (see chart). Of note, 97.6% of surveyed client-centered advisors said that reassuring clients is very important to them, compared with only 20.8% of investment-centered advisors. Likewise, meeting with clients was important to 88.1% of client-centered advisors, but to only 19.8% of investment-centered advisors.

For investment-centered advisors, 69.1% said that analyzing the market was an important priority, compared with only 14.3% of client-centered advisors. Similarly, analyzing client investment positions was very important to 53.4%, but 10.7% for the client-centered advisor.

We find the differences in the two types of advisors fascinating. To us, the research points out all too clearly that investment-centered advisors are failing to do what their clients need most: be there for them. In contrast, client-centered advisors keep their focus where it belongs-on building their relationships with clients so that they can serve them better.

It turns out that client focus leads to some very real (some might say staggering) bottom-line rewards. The research looked at how both types of advisors fared over a six-month period in the first half of 2001. Even though this was already deep into the market downturn, client-centered advisors actually enjoyed substantial success.

Over that six-month period, client-centered advisors gained an average of 6.8 new clients, each bringing $269,000 in assets. Existing clients also brought them new business, with an average of 7.3 clients delivering $64,000 each in additional assets. This works out to nearly $2.3 million in new assets for each client-centered advisor-and that was during six months of a very difficult market.

On the other hand, the investment-centered advisors felt the full brunt of the market meltdown. Averaging only 1.3 new clients with $51,000 in assets each, and receiving additional assets of just $13,000 from less than one existing client on average, these advisors brought in just $76,700 in new assets over the six-month period.

The upshot? The client-centered advisors, by reaching out to their clients during a rough market, brought in 30 times more assets than those investment-centered advisors who failed to be there for their clients when they needed them the most.

Becoming a client-centered advisor is all about putting your focus squarely on building client relationships. Cultivating relationships is a complex process, so it's helpful to break it down into three parts:

1. Know what your clients truly want. Every decision you make-which processes to use, which services to offer and which institutional financial partners to ally with-must be informed by what is important to your clients.

2. Emphasize communication. An emphasis on communication must pervade every aspect of your practice, shaping everything from interpersonal relationships to the kinds of technology you use. Clients want both frequent communication-the more the better-and quality communication-warmth, patience, good listening skills and attention to their individual needs.

3. Take client-centered actions. You must be proactive and intentionally incorporate specific client-centered practices into your firm. Industry research into the best practices of the most successful client-centered advisors shows that these actions break out into seven specific categories:

Interpersonal contact. Actions that make clients feel valued-as if they were your most important client.

Access. Actions that ensure that each client has the level of access and communication with you and your firm that they desire.

Timeliness of contact. Actions that show each client that you are extremely responsive to changes in their personal lives, as well as to events in the outside world that affect their portfolios.

Customization. Actions that identify and provide for each client's personal preferences.

Client appreciation. Actions that express to your clients your appreciation and gratitude, not just for their business, but for their relationships.

Responsiveness and feedback. Actions that guarantee that you will continually monitor and improve the client experience to ensure optimum satisfaction.

Problem resolution. Actions that minimize client dissatisfaction with service failures or any other type of problem.

While many advisors consider these to be trying times, we believe they are the best of times for client-centered advisors ... and the research supports that. In fact, 94.6% of client-centered advisors thought that this was a "good time to get new clients" while less than 1% of investment-centered advisors thought the same. Because the vast majority of advisors are not rising to meet the challenge of serving their clients well, those who do-the client-centered advisors-are being amply-even disproportionately-rewarded.

The results of a client-centered approach speak for themselves. When you have highly satisfied clients, the result is higher income for you. You owe it to yourself, your family and your clients to reach your next level of success-begin today to build client focus into your practice.

John Blomfield is director of educational initiatives at OppenheimerFunds and Sharla D. Hamil, CIMC, is director of training at CEG Worldwide. To obtain the white paper The Client-Centered Advisor or for more information, call (800) 255-2750 or visit www.oppenheimerfunds.com.