How to Boost Client Confidence, According to Research

by Jane Wollman RusoffMarch 19, 2024 Even when clients say they are satisfied with their advisor, there’s no certainty they are confident about their financial future.This finding comes from a 2023 study of 1,000 clients and prospects conducted by Absolute Engagement, a research firm that focuses on overlooked advisor opportunities: Only 53% of respondents are confident that they’ll reach their financial goals.The implication?“It’s a leading indicator of risk in the relationship,” Julie Littlechild, founder and CEO of Absolute Engagement, tells ThinkAdvisor in an interview.The survey, developed with the Investments & Wealth Institute, identifies areas where financial advisors can add value.For instance, “Advisors need to get inside the hearts and minds of clients in a more robust way” to “personalize the relationship,” argues Littlechild, winner of a 2023 ThinkAdvisor Luminaries award for financial and investment innovation.In the interview, Littlechild notes that advisors best talk with clients about more than numbers. “The data is leading us down the path of advisors leaning into non-financial issues,” she says.Here are highlights of our conversation:THINKADVISOR: How happy are clients with their financial advisors, according to your 2023 survey? JULIE LITTLECHILD: They’re happy. But for some clients, when they look forward, they have softer confidence — maybe not as much confidence that they’ll reach their goals.What’s the significance?That’s a leading indicator of dissatisfaction. Because it’s correlated with things like satisfaction and loyalty, it’s a leading indicator of risk in the relationship.Our confidence index reflects the client’s sense of financial security and confidence that they’ll reach their goals, their sense of control over reaching those goals and clarity about the future. So some are [essentially] saying, “I might not be dissatisfied right now, but I might be in the future.”How can the advisor turn this low confidence into something positive?It’s an opportunity to talk to their clients and work through those issues.This is 2024, not 1994. Should advisors be doing something different in their general approach to helping clients? They need to get inside the hearts and minds of clients in a more robust way, not just ask them, “How are things?” but teasing out what their concerns are and being a bit more scientific about how they do that. We’re in favor of having more and better data on how clients are feeling and what they need. Advisors can use that information to personalize the relationship, moving from generic communication to communication that reflects clients’ specific needs and concerns.In your report, “Beyond Satisfaction,” you asked how clients were feeling when they thought about the future, the kind of support they need, what’s keeping them up at night. What did the responses reveal? Since the onset of COVID, we really started going deeper into not just what a client expects and what their [investment] performance is but how they’re feeling. Almost equally as important as having money was having good health and spending time with family. A lot of clients said it would be helpful if their advisor could help them think through those goals.Why don’t they?Many clients that were surveyed said they didn’t share that [sort of information] with their advisors.I think that’s true. They get very caught up in “We’ve got to look at your portfolio and your plan and review the last quarter.” That chews up a lot of time.But sometimes these aren’t the right things to talk about. Sometimes clients need a different conversation.I think this will be a skill set that advisors will evolve. Some do it very well, but not all.Your company is called Absolute Engagement. Just what is “absolute engagement” when it comes to clients?What drives engagement is that clients feel good about their advisors. And they are advocates for them.Engaged clients are five out of five on satisfaction, and they’ve provided a referral in the last 12 months.There’s a more personal relationship: The advisor is proactive in understanding how their clients are feeling, regularly reviewing their plans for their future.Why is it so important, on the advisor side, for the clients to be engaged?A few core benefits: increased loyalty, increased share of wallet — the percentage of assets that are being managed by that FA if the client is working with more than one advisor; and higher perceived value relative to fees — that is, they understand the value of advice.Please elaborate on “share of wallet.”Clients who are engaged tend to have a higher percentage of their assets with one advisor. And they’re not just looking at performance. Further, they tend to be more confident of their financial future.                                                      Will artificial intelligence help in researching client engagement?As we capture more and more data on how clients are thinking and feeling, we’ll begin to use more machine learning and predictive analytics.What’s the key to engaging couples?The most overlooked way of engaging is to set an agenda that reflects what’s on the couple’s mind individually.So many advisors say they want to meet with couples. When the two come in, often the advisor tries to involve the quieter one. That’s all well and good. But they may not be discussing the things that are important to both people.Some of the most incredible impact we’ve seen is when advisors are inviting input separately from couples on how each feels and what they need.Then they bring the two sets of input into the conversation.That’s a much more powerful way to engage than trying to convince somebody they should care about the numbers.Is that what advisors typically do?The most common strategy is that the advisor is trying to get the non-financial one interested enough in what they’re talking about.But maybe they’re talking about the wrong things.The original version of this story was published on ThinkAdvisor.