4 Ways for Advisors to Better Engage Clients

Step 3: Create a Deeper Connection

While engaged clients often describe their experience as intangible, like a deep personal connection, a sense of being guided or a sense of trust, those descriptions have tactical foundations. They do not happen by accident. Connection requires a meaningful client experience that is defined, communicated and measured.

The Engagement Roadmap points to the following core activities to create deeper connection:

1. Segment your clients based on the value they deliver to the business.
2. Define your service offering by segment, including frequency of contact, range of services and client appreciation.
3. Analyze your capacity to ensure that you can deliver on your defined service standards.
4. Communicate your plan to clients.
5. Create a tracking process to ensure that no client falls through the cracks.

About two-thirds of advisors say they segment clients based on value, with the vast majority focusing on assets (83%) and revenue (78%). Assessing fit is about uncovering the deal-breakers. Segmentation, on the other hand, simply helps you define value in order to structure a meaningful and profitable client communication plan.

What differentiates advisors who have successful communication plans is not only that they have defined annual contact goals (76%), but that those goals are tied back to client expectations. There is no one way to communicate with clients. Client input should help you determine if they value client appreciation events or activities (about half of successful advisors do them), if workshops are meaningful (about 40% of successful advisors do them) or if a written summary of action items from a review meeting will be helpful (nearly 70% of successful advisors do them).

Question No. 3 for advisors: Do you have a clearly defined client experience, by client segment, that is meaningful to clients and profitable to deliver?

Step 4: Take the Lead

Engaged clients describe their advisors as "leaders," i.e., they provide guidance in making difficult decisions. According to our research, advisors who are leaders are (by client definition) those who are proactive, who provide reassurance and who keep clients focused on the long term and making the difficult decisions associated with doing so. A majority (87%) of advisors say they are "somewhat effective" or "very effective" leaders. The most recent client data in the Canadian market suggests this number is overly optimistic.

The Engagement Roadmap points to the following core activities to support leadership:

1. Clearly define the role you will play with clients as it relates to their financial lives, considering the scope of your role across other professionals and the family, as well as how you would define strong leadership.
2. Refine the client review to ensure you are actively focusing on the relationship in addition to the plan or portfolio.
3. Conduct relationship reviews that will communicate and reinforce the role you play in the lives of your clients.

There is a perception gap between the advisor and client on the issue of the advisor's role. While a majority of advisors feel they play a central role in their clients' lives, many clients see that differently.

Question No. 4 for advisors: Do you have a clear sense of how your clients define leadership and the activities that will support that positioning?

Leveraging Engagement

In addition to considering how they might drive greater engagement, many advisors are rightly focused on how they can leverage their already engaged client relationships.

We know, from the Economics of Loyalty survey, that client satisfaction and client loyalty are not closely connected to referral activity. In fact, we know that being comfortable providing a referral is not closely connected to referral activity nor is asking for referrals. We also know that a small percentage of clients—your engaged clients—are providing virtually all of your referrals.

The research shows that clients refer to help a friend or family member. This simple fact further supports the notion that our fundamental assumption that our clients refer to help us grow our business is, at best, wrong. At worst, it may harm our relationships.

Advisors report that their clients are very comfortable providing referrals, with more than 70% of advisors indicating that half or more of their clients would refer. They are right; in fact, more than 80% of clients say they are comfortable providing a referral. The reality is that advisors said they only received, on average, nine successful referrals in the last 12 months.

While low, these numbers reflect the investor research, which clearly demonstrates that virtually all referrals come from a small subgroup of engaged clients. If nothing else, it is clear that if advisors are asking for referrals, that message is not getting through.

Question No. 5 for advisors: Do you have a defined process to leverage engaged client relationships to drive referrals?

Putting It All Together

Client engagement sits at the intersection of what is right for your clients and what is right for your business. Engaged clients are the most satisfied and loyal, and they drive virtually all of the referrals in your business. To that extent, engagement matters. The Engagement Roadmap takes those facts, drawn from client research, and asks for the next step. What are the specific tactics that will directly impact engagement and growth, and how can the 600 advisors we spoke to help you think about execution? But don't wait: one step forward is all it takes.