Client engagement is a measure of the quality of a client’s relationship with his or her advisor and the impact of that relationship on the advisor's business growth.
Engagement is defined by incorporating four main components of the client/advisor relationship: loyalty, satisfaction, share of wallet and referral activity.
This is according to Advisor Impact’s Client Engagement Index, sponsored by Genworth Wealth Financial. The index is based on data collected through Advisor Impact’s annual "Economics of Loyalty" research study.
“The goal is to deliver an outstanding client experience, and then have a growth component as well,” says Julie Littlechild, CEO of Advisor Impact.
Engaged clients feel a strong connection between the advice they receive and reaching their financial goals. Clients describe their financial advisor as a strong leader and place an extremely high level of trust in him or her.
The results show that 28% of clients were identified as engaged, and virtually 100% of engaged clients referred their financial advisor to a family member, friend or colleague. On average, engaged clients provided their advisor two referrals in the last year. These referrals are critical drivers of success and growth for an advisor's business.
Several factors are essential for clients to feel engaged. By identifying the key factors of engagement, advisors may be able to move clients from "merely satisfied" to "actively engaged" as categorized in the study. Fundamentals such as increased frequency of client contact, a more personalized client/advisor relationship that focuses on the unique needs and circumstances of the client and expanded services to incorporate other professionals such as lawyers or accountants may move clients toward engagement.
“Now that we have isolated these clients, advisors can ‘reverse engineer’ and understand what’s different about these relationships, giving advisors a road map to guide more clients to the engaged category,” says Littlechild.
The Client Engagement Index is based on data collected through Advisor Impact’s annual "Economics of Loyalty" research study. The report highlights 1,207 investors surveyed in the fall of 2012. All respondents worked with a financial advisor and made or contributed to the financial decisions in their households. Asset levels were determined to reflect the typical distribution of clients working with advisors based on Advisor Impact’s client audit program.