Client-centric strategies aren’t a novel concept in business, as companies such as The Ritz-Carlton, Amazon and Starbucks have shown. Yet it’s a concept that has yet to be fully embraced in the financial industry.

Some financial companies firmly believe clients are most attracted to a product, so they devote their resources to the transaction side of their businesses. A client-centric approach, in contrast, starts with assessing and meeting clients’ needs. For financial firms looking to build more trust with their clients, a client-centric approach gives clients greater confidence that they are at the center of the organization’s mind set. Yet many providers of wealth management advice have missed this opportunity to distinguish themselves.  

Advisors need to examine their operations and decide on what constitutes a truly client-centric approach for their business, how they can create it and how it can benefit all stakeholders, including clients, shareholders and employees.

Being client-centric simply means putting the client first—understanding the client’s needs and creating and delivering an experience that will satisfy those needs. This fosters loyalty, which builds a sustainable relationship between clients and their service providers. It may be helpful to examine how the previously mentioned companies—the Ritz-Carlton, Amazon and Starbucks—are client-centric.  

The Ritz-Carlton, for example, places an emphasis on hiring and training the right people.  One of the hotel’s strategies is what they call the “lineup”—a daily session where employees spend 15 to 20 minutes sharing stories about their unique experiences with clients. In one meeting, employees heard about a Ritz-Carlton laundry manager who flew from Puerto Rico to New York to personally return a dress to a customer after removing a stain from the dress. That type of commitment to educating employees instills a passion for the client that has helped the Ritz-Carlton become a prominent brand in the hospitality industry.

Amazon founder Jeff Bezos stated in his company’s 2012 annual report his commitment to making the Seattle-based online retailer the “Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online at the lowest possible prices.”

The company wants to “impress” customers, Bezos added. It does so by monitoring the customer experience relentlessly, solving problems quickly (Amazon will sometimes issue customers a credit if problems arise) and adding value proactively instead of reacting to competitive pressures, he says.

Starbucks’ mission statement is “to inspire and nurture the human spirit—one person, one neighborhood at a time.” By doing so, the company states on its Web site,  “We enjoy the kind of success that rewards our shareholders.” In other words, by putting the customer first, Starbucks recognizes that it helps not only customers, but the company’s bottom line. For Starbucks, a client-centric view benefits all constituents.  

Product Vs. Service
While one would assume that wealth management firms would champion personal service because they focus on a very small sector of the population, that’s not always the case. Many firms still focus more on sales volume. A truly client-centric wealth management firm must create a culture that puts the client first.  It cannot merely be a part of a mission statement, but should be reflected in five key areas:

Management: Leadership on key issues starts with a clear message from senior management. Company leaders must make clear to employees that client-
centricity is a fundamental principle of their business. They should also stress that this philosophy will benefit clients, shareholders and employees. 
Moreover, the CEO must create an alignment of interests among clients, shareholders and employees. Wealth management firms, for example, should strive to have clients and employees invested in the same investments wherever possible. Obviously, this will depend on each individual’s investment goals, but living by the motto, “We eat our own cooking” is an important part of being client-centric. At Bessemer Trust, for example, our owners and original clients, the Henry Phipps family, invest pari passu with clients and employees.

Hiring And Training: Attracting, retaining and motivating the right employees is critical to developing client-centricity. Firms should hire people who believe in teamwork and collegiality, and avoid those with personal agendas and “sharp elbows.” Training must go beyond technical skills and include ethics, expected behavior and proper conduct.  

Compensation: Employee compensation must reflect a client-centric attitude that rewards the right behavior. It needs to provide for specific incentives for employees who go beyond the norm to deliver service that “delights” the client. For employees who do not directly deal with clients, incentive compensation and promotion should be based on assisting client-facing staff in solving a problem.  

Internal And External Commun­ications: A company’s commitment to client-centricity must be regularly reinforced with employees, clients, prospects and the professional community. Internally, employees need to be periodically reminded of the importance of clients’ interests by senior management. Various channels can be used: A laudatory e-mail acknowledging a particular client-centric action or even conversations about the topic in the break room or by the watercooler can underscore this message. At Bessemer, we include “war stories” in our monthly corporate communications meeting to recognize employees who have provided exceptional client service.

Good communication with clients is also critical to being client-centric. This includes regular face-to-face meetings, e-mails, events, phone calls and reporting. When communicating with clients, keep the message clear and free of jargon, timely and accurate and proactive and personal. Also, make sure the message is delivered in a user-friendly format that the client can read on smart phones, tablets and other electronic devices that are becoming increasingly more common.

Client Profiles: Although many wealth management firms take pride in how well they know their clients, as a whole, the industry needs to move well beyond mandatory “know your client” regulatory requirements. Client-centric firms should know more than the family’s financial profile, goals, investment objectives, risk tolerance and so forth. They also need to know the family’s goals and values, their non-financial and philanthropic goals, their personal interests and any health or personal security issues.

Many wealth management firms have developed educational programs, particularly for younger family members, to address concerns parents may have about their children’s ability to handle the responsibilities of wealth. At Bessemer, for example, we’ve developed a series of events focused on broad financial education issues, such as investments, taxes and philanthropy, along with broader topics of interest to younger individuals, such as careers and entrepreneurship. We’ve also launched a series of videos that permit younger clients to learn wealth concepts online and at their own pace.

It’s important to stress that educational needs don’t necessarily apply just to younger family members. In some cases, recently divorced or widowed clients who previously were not deeply involved in their family’s financial decision-making are also in need of educational services. Situations such as these give wealth managers an opportunity to be of great assistance to clients during a difficult period.

A Benefit To All
If clients perceive that their relationship with a firm is deep and meaningful, it usually leads to greater loyalty, higher retention rates and more referrals. While a product-centric focus may yield higher short-term profitability, a client-centric approach will result in more sustainable, long-term profitability. Client relationships become stronger, and thus it’s more likely the firm will come to manage a larger share of a client’s wealth and provide a broader level of service. That benefits shareholders and allows firms to truly differentiate themselves from those that remain stuck in a product mind set.

Moreover, for employees, a client-centric firm will be a more attractive place to work, with its emphasis on being collegial and ethical and valuing deep client relationships. The best talent will beat a path to the doors of such firms.

Robert C. Elliott is a senior advisor at Bessemer Trust.