Wealth management is about managing wealth and people, and in that vein a recent report from Cerulli Associates found that financial advisor practices that emphasize client experience have a 93 percent higher median client size compared to the industry average of more than $500,000.
Furthermore, advisors with client experience-centric firms suffer less involuntary attrition, which Cerulli defines as clients passing away, moving to another financial advisor or transferring assets to a direct/online provider. Cerulli says involuntary attrition accounts for 26 percent of asset outflows at experience-centric firms versus 34 percent at advisor firms on average.
“Advisors can harness the power of their client experience to increase retention, reduce attrition and generate a strong referral system,” said Marina Shtyrkov, research analyst at Cerulli. “To do so though, advisors need to restructure their thinking—and their processes.”
In Cerulli’s U.S. Advisor Metrics 2018 report, the Boston-based research and consulting firm said just 30 percent of advisors it surveyed across various channels see themselves as experience-centric practices that go above and beyond to make clients feel special and offer a repeatable, consistent client experience.
But competitive pressures and heightened fee awareness are motivating advisors to rethink and reorient their value proposition to focus on client experience. As such, according to Cerulli, more advisor practices are placing less emphasis on measuring their value based on their investment credentials and are thinking more holistically about the non-financial, intangible impact they can have on their clients’ lives. In other words, they’re attempting morph from being an investment consultant to a life coach.
In the report, Shtyrkov said advisors are adopting a combination of technology-driven client segmentation, intergenerational engagement within a team-based model, client appreciation, and holistic perspective to deliver an enhanced client experience.
“For now, experience-centric practices are in the minority—but practices that adopt and invest in a client-centric mentality will likely cement their value proposition and engender lasting loyalty from clients,” she said.