As we navigate the tumultuous currents of 2023, opportunity is emerging from uncertainty. As a financial advisor, you stand at a crossroads. The path you choose could lead to unparalleled growth—or stagnation.
The fact is, clients need you now as seldom before and are looking to you for leadership. Take the right steps today, and you will reinforce the trust and loyalty of your current clients while also drawing in a new wave of affluent clients seeking guidance amid the storm.
The end result: You will plant the seeds for exceptional organic growth in the coming months and years.
Carry on with business as usual, however, and you may find yourself in a very vulnerable position. In this uncertain time, many of your clients are no longer as patient as they once may have been. They know they need help. If they’re not getting it from you, they may look elsewhere.
To succeed in this environment, you must play both offense and defense.
• Offense means deepening your client relationships, and expanding your range of services to deliver the value clients are seeking.
• Defense is the flip side of the coin: You must endeavor to raise the bar in order to avoid losing business to more nimble competitors.
Advisor-Client Relationships Today
Your ability to build trusted, long-term client relationships is more important to your success than ever before, given that investment management has become almost fully commoditized. These relationships are the most likely source of introductions to qualified prospective clients and additional assets to manage, making them your most potent driver of organic growth.
Feeling heard and understood, trusting their advisors, being in regular contact, and getting help with their full financial pictures—these all are qualities investors seek in the relationships with their advisors. So how are investors feeling about their relationships with their advisors? A recent study conducted by CEG Insights, our research group, points to how much room for improvement there is for many advisors regarding their client relationships.
A few notable takeaways:
1. Large numbers of clients are not feeling truly understood by their advisors. Fewer than six in 10 investors (57.7%) think that their advisors understand their most important financial concerns.
2. There are issues around trust. More than 40% of clients do not have a high degree of trust in their advisors.
3. Communication is lacking. Just 50.6% of investors report that their advisors regularly reach out to them, suggesting that nearly half do not feel their advisor maintains consistent communication.
Advice Beyond Investments
CEG Insights also found that, overall, fewer than half of investors today (48.6%) are getting help beyond investment management to address their full financial pictures. Investors with the highest levels of investable assets—those who generally have the most complex financial situations—are more likely to receive comprehensive services from their advisors, but there are still major gaps.
Example: Among investors with between $5 million and $10 million in investable assets—a group attractive to nearly any advisor—nearly half (44.5%) report not getting help with their entire financial pictures.
This is a huge missed opportunity to grow organically by delivering the range of services the affluent want and need. As just one example, consider the advanced planning service of tax mitigation:
• Reducing taxes is a crucial concern for most wealthy households, with 78.2% of investors expressing some or significant interest in discovering ways to minimize their taxes.
• However, only 41.6% of investors currently receive advice on tax mitigation—presenting an opportunity for advisors who have ready access to tax experts.
Action Steps: Elevate Client Service And Deliver Advanced Planning
Clearly, many financial advisors need to focus on improving their understanding of what’s important to their clients, increasing their responsiveness and frequency of contact, building trust, and expanding their services beyond investment management. But even if you believe that you are already doing an outstanding job in these areas, consider whether you could improve even further serving clients while bolstering your own success.
Your efforts in these areas can be placed in two broad categories: client service and advanced planning.
Client service action steps to consider implementing:
• Schedule financial plan reviews with each client. Be ready to address concerns about the current market situation and its impact on their plans.
• Conduct deep discovery at the beginning of each client relationship. These conversations should go well beyond financial topics; you should gain a clear understanding of your clients’ most important values, goals, relationships and interests. This will set the stage for trusted, long-term relationships.
• Make frequent client contact systematic. Use your client relationship management platform to ensure that you are reaching out on a regular basis. Enlist team members to help with a portion of the contacts.
Advanced planning action steps to consider implementing:
• Assemble a network of authorities who can assist your clients with their advanced planning needs. Many advanced planning solutions can be implemented with the help of an accountant and an estate planning attorney. You may also need to enlist a life insurance agent, an asset protection specialist and others.
• Create advanced plans for appropriate clients. Work with your network of professional advisors to develop an integrated plan for addressing the range of clients’ advanced planning concerns.
• Be ready to step out of your comfort zone. Expanding your service offering to include advanced planning solutions is not something that is done overnight, and it may well take you out of your comfort zone of investment management. However, it is the single most powerful action you can take to serve your clients better and enhance your value proposition to attract and keep wealthier clients.
Conclusion
Each of these actions on its own will enhance client service and satisfaction. Taken together, they have the potential to dramatically elevate client service, attract and retain wealthier clients, and drive significant new net organic growth.
Now more than ever, your clients and your team need you to raise the bar, defy expectations and be the best possible advisor you can be. Make the commitment today to play offense, play defense and—most important—play to win.
George Walper and Catherine McBreen are managing principals with CEG Insights (formerly Spectrem Group), leading innovators in wealth management research. Dive into our exclusive insights and strategies with our latest "Play to Win" Report. Unlock Your Path to Success – Download Now!