A survey of more than 40,000 clients reveals that as your relationship passes the three-year mark, you’re most at risk of being dumped. Rod Bertino explains.
One of the key insights to emerge from a recent analysis of our CATScan data was that the clients who have been with their adviser for between three and seven years could represent a very real business risk for many practices.
Our data shows that those clients in the three- to seven-year duration band are less satisfied with their adviser’s performance, across all nine of the key service delivery areas covered by the CATScan, than their peers who have only recently joined the practice or those long-term clients who have been with their adviser for seven or more years.
This is perhaps not that surprising when you consider the normal client relationship lifecycle. In the early days, advisers are actively engaged in the comprehensive fact find/discovery process and are intent on fully understanding the needs and wants of their new client. Through the creation of personalised financial plans and/or the restructuring of product holdings and investment portfolios, advisers get the chance to continually showcase the depth of their technical acumen and professional expertise.
At the other extreme, those who have been clients for seven or more years in some ways become almost “rusted on”. While great care must be taken never to take these long-term clients for granted, the relationships are usually very strong and the service delivery expectations are well known and well managed. You know them well, they know you well and provided there are no unforseen surprises to shake this confidence, things normally progress quite smoothly.
However, the very nature of the relationship is different with the clients in the three- to seven-year bracket. The initial euphoria that comes from putting together a new financial strategy may now have worn off and there may not be a need to regularly buy and sell investments, update the level of protection cover or change policy providers. It may also have been some time since these clients have met face-to-face with their adviser; and unless the ongoing practice communication program is extremely effective, they may be feeling a little “unloved” and starting to question the promises that were made when they first joined.
So what can advisers do to mitigate the risk these mid-term clients pose?
Of course it is always dangerous to generalise, and each business is unique and hence the challenges and solutions will vary between practices, but in general, three key themes emerged from the analysis of the mid-term clients in our CATScan data warehouse.
1. CONTINUALLY REMIND THEM WHAT YOU DO
Clients sometimes mistakenly assume that if there has been no action recommended, their adviser has done no work. Advisers need to continually remind their clients of all the things they do for them, even if the individual benefit to them is not immediately obvious.
Also, clients don’t always remember the depth and breadth of solutions you may be able to deliver. Case studies and third-party testimonials are a great way to educate clients on enhancements to your service suite or to reposition existing products that may now be appropriate.
2. CONDUCT CLIENT REVIEWS, NOT JUST INVESTMENT UPDATES
The review appointment is the ideal opportunity for advisers to re-engage with their mid-term clients, and as we stated in a previous edition of Professional Planner, while many practices have invested countless hours examining the various elements of their review procedures and agonised over the content and layout of their review reports, clients continually tell us advisers often lose sight of what is most important – the client! We hear all too often from clients that while their adviser is very good at investment updates and product evaluations, in their mind, this does not equate to a client review.
First and foremost (and at the risk of stating the obvious), in the client’s eyes, a client review must be centred around the client. It should be all about them – their family, their business, their goals, their dreams and their aspirations. While their money and their policies are obviously important, they should not be the sole focus of the review.
3. POSITION, POSITION, POSITION
As anyone in real estate will tell you, positioning is paramount. It is also absolutely essential for clients with around five years of tenure – advisers need to make sure they remain visible and top of mind. They need to continually “touch” these clients throughout the year and importantly, ensure all their communication pieces are personalised and relevant (blanketed, shot-gun communications often do more harm than good). Practices should also leverage a range of different communication vehicles and not rely solely on emails or letters; and don’t ever underestimate the power of just picking up the phone!
In closing, all of us at Business Health would like to extend our very best wishes for the festive season. We hope you enjoy spending some time with those closest to you and return fully recharged for what promises to be another exciting ride in 2011.
Rod Bertino is a partner and director of Business Health – www.businesshealth.com
