According to the recently released CFA Institute/Edelman Investor Trust Study profiled in Financial Advisor magazine, investors “consider trustworthiness more important than investment management skills when choosing a financial advisor" by a ratio of two to one. Unfortunately, the survey also found that survey respondents “rated investment management firms as the least trusted industry to do what is right.”
It should be noted that according to the study, the low trust levels are an advisor rather than a financial markets issue. Of those investors surveyed, approximately 75% indicated that they were “optimistic about their ability to earn a fair return in capital markets.” Thus, we are reminded once again of the important role “trust” plays in a consumer’s selection of a financial advisor.
That being said, the question to be asked is fairly obvious: “How can an advisor convey the notion of trustworthiness to prospects and reinforce this trait to current clients?” With current clients, an advisor has the benefit of regular interaction through which to demonstrate stellar service, timely and meaningful communications and prudent counsel tailored to the needs of each client, each of which is a key element in building a trusted relationship.
But how about prospects? Can trust be effectively conveyed without a prospect having firsthand experience? It is our experience that the answer to this question is most definitely “yes.” The notion of trust can be successfully seeded in the minds of prospects through an effective marketing program. There are numerous examples of this within the financial services sector dating back several decades that include:
• Prudential’s “Rock of Gibraltar” marketing theme, which was in use for over 100 years and served as a metaphor for strength, endurance and stability … hallmarks of trust.
• John Hancock Financial Services' tradition of using “intimate conversations,” featuring clients sharing insights about their personal financial concerns, to say: “trust us.”
• Charles Schwab’s more recent “Talk to Chuck” campaign, which sought to boost perceptions of “approachability” among its mass-affluent target audience.
Yes, we know, these and other national advertisers in the financial services space have sizable advertising budgets and fully staffed marketing departments and employ the best advertising agencies in the world to help craft and distribute their messaging. Good news. With the emergence of digital media and social networking, it is now possible for smaller FA firms and independent advisors with limited marketing resources to effectively communicate their story in a targeted, effective manner.
The best way to start is by viewing client relationships from a long-term perspective. This will allow an FA firm to design “interactions” across each phase of that client acquisition process:
Marketing Funnel – Client Acquisition Process
1. Awareness
2. Consideration
3. Conversion
4. Loyalty
5. Advocacy
So, if you believe that “trust” is crucial to an advisor's success, one of the best methods for cultivating trust is through the “personalization” of client and prospect interactions. This extends from how prospects and clients are greeted by the firm’s receptionist to being addressed by name by the principals of the firm to the customized communications sent by the firm. Treating clients as individuals and reinforcing the fact that the firm both appreciates and values their business is an obvious “must” in earning their trust.
In the words of the noted psychotherapist, Alfred Adler:
“Trust only movement. Life happens at the level of events, not of words. Trust movement.”
How often are you proactively reaching out to your clients? Study after study has shown that high-net-worth individuals desire a higher frequency of contact from their financial advisors. Given that high-net-worth investors also tend to have their investments spread across multiple firms, increasing “share of wallet” is a zero sum game. Someone is going to win, but at another advisor's expense. Thus, architecting a “high touch” communications program focused on quality interactions between the firm and its clients is essential to maintaining trust.
Client interactions involve basic touch points that most firms subscribe to: annual face-to-face meetings, distribution of quarterly reports and periodic updates to keep clients informed of market and/or regulatory events. However, these should be considered “cost of entry” and therefore will represent little in the way of an opportunity to distinguish your firm from another.
Competitive differentiation can be achieved by layering on non-traditional touch points, which also tend to go a long way to building trust with the firm’s stakeholders. Random, periodic calls from the advisor and or principals of the firm to ask the “client” how they’re doing and see if there are any changes in their personal lives that can affect their financial plans and/or their satisfaction with the firm can go a long way. Event marketing is another excellent way to reinforce a client’s importance to the firm. “By invitation only” seminars, book signings and/or wine tastings not only signal a level of appreciation, but create excellent opportunities for casual interactions that are essential to forging deeper relationships.
Finally, digital marketing and social networking tools afford FA firms an effective and cost-efficient means of layering on meaningful, personalized communication touch points that can involve the opportunity for two-way dialogue. These range from monthly newsletters to social media posts to automated “thank you” e-mails when a prospect or a client signs up for an event or white paper on the firm’s Web site.
The end goal is to build solid, long-term client relationships predicated on the notion of trust. Once a prospect has “converted” and become a client, feelings of trust, fueled by hope and expectations, are often at their highest. Maintaining and/or earning that trust day in and day out over the course of the relationship is critical to achieving “advocacy.” After all, client referrals remain a critical component of an FA firm’s practice development efforts.
Cliff Campeau is a partner with Evolutionize LLC and a regular blogger on financial services marketing best practices. Evolutionize specializes in providing independent financial services firms with a suite of proven practice development solutions, including Web site development, inbound and outbound marketing tools and compliant social media marketing program support. Campeau can be reached at [email protected].