Typically, the client-advisor relationship takes the form of one-on-one connections in something of a hub-and-spoke model—the advisors in the center with lines of communication and interaction extending out to clients.
While this traditional approach contains its fair share of benefits, over the long run, relying exclusively on this model will limit the ability of financial advisors to add more value to their client relationships, and negatively impact their businesses.
Instead, it’s time for financial advisors to replace the antiquated hub-and-spoke service model with the creation of a truly interactive client network that drives a greater sense of community, shared purpose and relationship loyalty.
How The Client Network Model Works
Here’s how the client network operates: It’s no secret that successful financial advisors typically serve professionally successful clients. Many of them are in different professions or own various closely held businesses, and they would be open to getting to know one another to find new opportunities to collaborate.
For example, one business owner client may have a sensitive employee compensation issue that another client who practices employment law can help resolve. Or a client facing new tax complexities could find it helpful to work with another client who owns a CPA firm.
The most effective financial advisor will proactively facilitate mutually beneficial introductions between clients so they can benefit from knowing each other, while recognizing how being the advisor’s clients made all of this possible in the first place.
Right now, to the extent that introductions between clients facilitated by the advisor happen, they are almost always very reactive, prompted by a specific request by the client.
Having a proactive system and a comprehensive strategy to serve as the introductions facilitator as part of a client network approach is the logical next step in the evolution of financial advice.
Build Your Network Step By Step
Start by getting to know each of your clients’ professions or businesses on a deeper level. By digging into the issues that clients face from all perspectives, advisors can provide relevant, timely and valuable advice or introductions to other clients in the advisor’s network to address specific needs.
On the other side of the coin, advisors must complete a thorough vetting of a service provider’s strategies and approach before recommending them, even if that provider is also a client.
If the provider’s process does not meet their standard, an advisor shouldn’t consider making a recommendation. Equally important, best practices suggest that providing three suggestions for a client to vet minimizes any appearance of a potential conflict for the advisor.
Build A Digital Rolodex
Once you’ve gathered a more detailed level of intel on each of your clients’ jobs and businesses, it’s important to build a digital infrastructure that makes these detailed records available to the entire firm about professionals within your client base.
All the information in the world won’t matter if you aren’t providing the digital tools that enable advisors to make connections quickly between different client relationships.
The system should include details of a client’s business, length of the relationship with the firm and relationships the firm helped facilitate in the past.
This last part is critical. Keeping track of referrals and engaging in appropriate follow-up will determine if the introduction proved fruitful while reinforcing the primary relationship.
Educate, Advocate And Engage
Existing and new clients should know that their financial advisors are connectors and can be relied on for these kinds of introductions.
From hosting more frequent and regular business-to-business meetings to organizing more opportunities for clients interested in getting to know one another in a social setting, a successful client network model requires time, thought and energy from the advisor on an ongoing basis.
As part of their regular engagements with clients, advisors can have a straightforward discussion about making connections and the value this service can deliver.
Meanwhile, each client must have the freedom to opt out if they want to leverage the financial advisor but don’t want to become part of the network.
Towards The Future
The toughest part is getting started. But once the ball starts moving towards a networked approach to wealth management, advisors and clients will immediately see the benefits accumulate. This logical next step in the advice model can help set a firm apart from the competition.
Robert Amoruso is CEO and managing partner of Gideon Strategic Partners, a Santa Monica, CA-based independent wealth management firm with over $500 million in assets under advisement.