Despite recent focus on client engagement and experience throughout the industry, advisors don’t seem to be connecting well with many of their clients.
A majority of advisory clients do not feel appropriately engaged, according to “How Can Advisors Better Communicate With Clients,” a survey sponsored by investment research platform YCharts.
In fact, nearly two-thirds of advisors’ clients in the survey, 64%, said that their advisor contacts them “infrequently” or “very infrequently.” Of these infrequently contacted respondents, 66% said that more frequent communication would increase their confidence in their advisor and their financial plan.
Sean Brown, YCharts CEO, argues that much of the recent focus on client engagement is little more than lip service.
“There’s a lot of talk but not a lot of execution and action,” says Brown. “Advisors are not communicating well currently: it’s not enough, and it’s not the right information – but they’ve been forgiven of these sins a little bit because we’re in the 11th year of a bull market.”
YCharts found that strong communication between advisors and clients is key for retention -- 85% of respondents said that communication style would be considered when deciding to retain their advisors, and even more, 88%, said communication would impact whether or not they would refer the advisor’s services to someone else.
Excellent communications was also one of the top three most important factors named by clients for choosing an advisor. The other two most important factors were understanding the client and their goals, and portfolio performance.
“There are meaningful consequneces to not communicating well,” says Brown. “One is that clients don’t have as much confidence in their plan, two is that they’re not going to recommend you to friends and family and that’s the No. 1 way advisors get new clients, and three, they will have a higher propensity to look around for someone else to manage their assets. There’s a looming, ticking time bomb in advisor communication that’s goint ro really get exacerbated when the market decides it’s going to change course.”
Clients are coming to expect proactive communications from their advisors. Three-quarters of the respondents said that they value their advisor’s ability to anticipate questions and contact them in advance -- 35% strongly agreed that proactive communication from an advisor is important, while another 40% said that they somewhat agree.
Personalization is also important in client communications, according to the survey’s respondents. Three quarters of them said that they would like to see updates from their advisors personalized to them with statistics, visuals and relevant articles.