Building the bulletproof practice

Advertising and marketing industry veterans, Simmons and Laermer theorize that over the past 10 years, a transitional shift in attitude and a tilt in the balance of power between customer and supplier have occurred. This shift has ramifications for every industry – from how McDonald's fills its menu to the way General Motors designs automobiles. It also speaks volumes about what advisors should be doing, not only to survive in this constantly evolving industry but to thrive in it. Advancing technology and people's ability to more efficiently communicate with each other plays a large role in this phenomenon.

"Control has shifted to the customer," Laermer notes. "Customers are more savvy than ever before and are leveraging this ability." The advent of self-directed pension and brokerage accounts and the plethora of research now available thanks to the Internet and cable television has put more personal financial information into the hands of the public. Not only can investors discuss how much their mutual funds have returned but they now more freely disclose other things such as fees and what sort of service they're receiving from their advisor.

The authors note that today's consumer wants to feel that his advisor has his "best interest at heart." He does not want to feel that he's part of a gigantic, commoditized process where each client, in his advisor's eyes, is the same as every other. And as customers become less passive, traditional ways of reaching and serving them will become obsolete.

"Competition is very common in this business, but don't be afraid of it," says Bruce Fenton, a 13-year veteran with Atlantic Financial in Norwell, Mass. "Performance is not always the main reason a client comes or leaves. It's often service." It's important that an advisor and client see eye-to-eye early in the relationship, and Fenton – who targets the high-net-worth client and has retained more than 95 percent of his client base – emphasizes taking time to be clear about expectations. "Focus on your client type," he says. "This is best done early on. Be proactive. Make sure you tell them your practice's strengths. If you find you're not compatible, it may be better to refer them to someone else."

When it comes to contact, Fenton e-mails an original, monthly newsletter and frequently telephones clients. "It hurts when a client leaves after you've done a good job, but often it's for an understandable reason," he says. Nevertheless, Fenton keeps former clients on his mailing list. "Often a former client will tell you things a current client won't," he says. "Address these concerns."

Paul Puleo, an advisor with Messing & Puleo in Boca Raton, Fla., agrees. "You're not always aware that your client is being wooed by a competitor," Puleo says. "They may receive a seminar invitation or a call from an advisor referred by a friend or relative. To combat this, you've got to provide the utmost in customer service. Listening comes before selling."

For Puleo, that means promptly returning telephone calls and never letting the phone ring more than twice. His firm does not use an automated telephone service, as the partners believe their clients deserve to speak with "a real human being." He e-mails clients monthly and immediately works to correct any problems. One of the most common complaints he hears when meeting with a new prospect: "'My advisor doesn't call. He forgets about me.' No one wants to be forgotten about."

"I once provided a client with a solution set that was good for all parties, but outside parties caused a disruption to service. We were sorry to see them go," recalls Andrew Samalin, an advisor in Mt. Kisco, N.Y. "Sometimes it's difficult to manage all externalities, but we'll never stop trying. [Eventually], the client came back. He appreciated the solution, and we truly appreciated his return. When a client feels that you are his financial advocate, the relationship is both solid and long-lasting."

Each of the advisors interviewed urges his peers to take stock of what they can offer, refine their niche(s), get behind the latest technology and then regularly reach out to customers and prospects in new ways. "There's no substitute for communication," advises Puleo, a 21-year veteran who advocates making sure both parties understand the "financial objective" and to avoid those with unrealistic expectations. Puleo, who's turned down new accounts when the fit was not right, has also had clients return after leaving for another advisor. "I re-interview returning clients to learn their expectations." Puleo says. "It's a matter of trust."

Van Wart agrees. "A client may leave only to find that the grass is not always greener with another account executive or at a different firm," he says. "Although a client may leave due to a disappointment in one area, they may discover multiple issues with a new relationship. Clear and regular communications eliminates any potential misunderstandings and helps confirm strategic agreements developed in previous communications. Through this communication a client's holdings, investment strategy, and any profile changes are proactively discussed."

"I've had cases where returning clients have told me I kept in touch with them more than their new advisor," recalls Fenton. "Ask clients what they expect from the relationship. Communication builds trust. If clients trust you they will put their money with you."