It is cheaper to keep an old customer than to win a new one, but most adviser businesses are not making sure existing clients are well looked after, particularly in difficult times. Amanda White reports on effective communication.
In marketing speak, actively seeking to enhance a client’s experience can have a significant impact on brand loyalty, revenue, referrals and product sales.
In other words, look after your clients and your business will go from strength to strength. And yet still it seems most financial advisers make decisions based around their businesses, not their clients.
David Fox, principal of Advice Centre Consulting, a consulting and support service business aimed at financial advice businesses, believes that in about three years’ time the financial advisory industry will be dominated by large client-focused advice businesses. This is predicated on the fact the power of the client is growing alongside an understanding that they don’t have to accept particular products, or strategies, as they have in the past.
Fox believes there are signs that the better advice businesses are becoming client-centric, and making decisions from the client up, not the business down, but there is still a long way to go.
‘Advisers habitually fall onto the back foot in their communication strategies’
“Advisers say they have the best interests of clients in mind, but they don’t operate like that, they make decisions with the business in mind, not clients,” Fox says.
He believes looking at a situation from the clients’ viewpoint is the key to understanding how to communicate with them, especially in difficult times.
“So many people want to afford a lifestyle and come to an adviser in order to fund that,” he says. “So when you are communicating to those clients, reinforce that you know their goals, that there has been market volatility, but they are still on track.”
Fox believes a one-page graphic for each client is enough to demonstrate that point effectively, but that personalising is the key.
“Most businesses are sending impersonal information that is recycled spin and old stories that have been used for 30 years. I have, personally, received some of this,” he says. “A lot of people invested a lot of money 12 months ago because of the superannuation changes; it is insulting to them to receive communication material that is obviously old and just spin about market volatility.”
It seems another common pitfall is that advisers habitually fall onto the back foot in their communication strategies when markets are down.
Andrew Mackenzie, chief executive of business coaching firm Shirlaws, says it is common for advisers to be defensive and reactionary, rather than proactive, when markets are down.
“The main thing is people go on the back foot instead of the front foot and this heightens the fear on the side of the client,” he says. “What people can’t see is what they fear the most. It is much better to inform people, to communicate and tackle it.”
Shirlaws’ clients range across all industries, with about 35 per cent stemming from financial services, and generally Mackenzie believes advisory businesses are not client-centric enough to be proactive with their communication strategies.
“They tend to stick with their regular systems and just do their regular reviews. Advisers fear communication because they think clients will take their money out. But they should be communicating that now is a good time to invest,” he says.
The communication experts agree being honest and accessible can be the most effective tools in communicating in times of down markets.
“Often in times like this the news is perceived as negative news, but it is not actually negative news; then it becomes how to communicate,” Shirlaws’ Mackenzie says. “The way very successful planners communicate is they show a window, that is today, then show a different period of time,” he says. “The number of people this is really affecting is a very small per cent, but 70 to 80 per cent of clients would say they feel it.”
What that means is appeasement via effective communication.
“Advisers need to get on the front foot, say this has happened before and we got through it. A letter that says this is what the market is doing, this is what it has done in the past, outline what it means for the client, and ask them what they think it means for them. Give them an option to come in and discuss it,” Mackenzie says.
Fox is astounded at how some of the most skilled advisers believe clients are comfortable in times like this and don’t need any further communication.
“But I think they have as much comfort in that as the articles that say clients feel comfortable paying commissions. They don’t, it just depends on how the question is asked,” he says.
“We should look to the medical profession, which is very good at articulating and explaining things simply. Doctors tell it like it is but relative to your life, and that there is a solution to the problem. Advisers don’t have those skills.”
It has long been recognised that difficulties in the effective delivery of health care can arise from problems in communication between patient and provider rather than from any failing in the technical aspects of medical care, according to the website of the US Department of Health and Human Services.
And, importantly, improvements in providerpatient communication can have beneficial effects on health outcomes. The basic tenet to being effective, the website says, is that the doctor must get an understanding of the patient’s perspective on their illness.
This has very real implications for advisers and their clients – effective communication is not something that can be mass-produced. Just as each patient has a different lifestyle, family, work and psychological framework from which to view their illness, advisers must be aware that each of their clients has a unique perspective on their financial situation.
Indeed, there are other lessons advisers can borrow from the medical profession, as the industry evolves. Historically in medicine, there was a paternalistic approach to deciding what should be done for a patient: the physician knew best and the patient accepted the recommendation without question.
But as the US department’s website explains, this era is ending and is being replaced with consumerism and the movement towards shared decision-making.
If Fox’s predictions of this industry are correct, and the successful businesses in the future are those that are client-centric, then advisers have to adapt all of their tools, including their communication methods, to this point of view.
Every cloud has a silver lining
Evolution Media, a marketing and communications agency which specialises in providing strategy for B2B and consumer organisations in the financial services industry, outlines the top five communication methods, using new and traditional media, it recommends in a time of crisis. Overall, frequency is everything. In times of market uncertainty planners should be contacting clients via at least one of these forms monthly. Information is power, and the more information you can give your clients, the less likely they will be to make rash investment decisions or seek advice elsewhere.
1. Pick up the phone and call your top 20 per cent of clients.
2. Respond to the news – if headlines in mainstream newspapers are selling doom, then respond with your own view and send it to clients as an e-newsletter.
3. Talk to them online via email – so clients feel as though you are their partner in crisis.
4. Make your website information rich – up-to-date content which explains market volatility with a long-term view and reassures your clients. People are used to researching their financial products online and will be comfortable having up-to-date, timely information at their fingertips from a trusted source.
5. Use online video to explain volatility – if you have dozens or hundreds of clients it can be hard to see them all face-to-face. “Slivercasting” is an incredibly useful tool to talk directly to your clients and prospects. This will also generate further traffic and most likely referrals to your site.