There is a strong bond between the quality of your client relationships and your ability to grow your business. In this article, we map out the linkages between laying a strong service foundation and then leveraging that foundation to grow, either organically or through external sources. Most advisors recognize that strong client service is an opportunity in and of itself; our focus here is how to take the first steps toward defining or refining your foundation while simultaneously identifying opportunities to grow your existing client relationships.

The way in which you define your target clients and the goals you have set for your business will strongly influence the tactics that will have the greatest impact on your business. Next, we'll make the case that business development success is a balance between starting with a solid foundation, selecting the right tactics and executing those tactics consistently and well. Financial advisors, it seems, agree.

In a recent study of investors, Economics of Loyalty, Advisor Impact proved something we have always espoused, which is that there is a clear and enduring link between the quality of advisors' client relationships and their ability to grow profitably. Any growth strategy, therefore, begins with existing clients and the strength of those relationships. Building on that foundation, advisors can choose to focus organically (cross-selling, share of wallet and referrals) or externally (prospecting, centers of influence or acquisition) (see "Strategies for Growth" on page 79).

CLIENT FEEDBACK

One of the simplest places to start in laying a strong foundation is with a client feedback strategy. Too often feedback is seen as "nice to have" in advisory firms when, in fact, it can have a fundamental impact on overall profitability, and drive growth. Executed well, it not only tells advisors if clients are satisfied, but it also uncovers detailed information on what they need, want and expect, and that links directly to revenue and referral opportunities.

A relatively simple client survey should help you to meet at least four core objectives:

* Building deeper relationships;

* Structuring and streamlining client service;

* Cross-selling more effectively; and

* Increasing referrals from both existing clients and outside centers of influence.

That said, a minority of firms have conducted a client survey in the past three years (see "Yes or No?" at left). Notably, top-quartile advisors (the top 25% of advisors based on total owner income) are more likely to have asked for client feedback, suggesting a stronger focus on understanding the needs of clients. Similar patterns hold for client feedback when we look at business model, although investment advisory and insurance firms are less likely to ask for feedback (see "Yes or No, by Business Model," at left).

While a majority of advisors agree that creating and maintaining a satisfied client base is critical, we can see that few formalize the process with feedback. The reality is that, like most initiatives, this process takes a commitment not only to ask the questions, but also to respond to the answers.

In addition, client feedback is a very personal process and many advisors are gripped by the fear of hearing potentially negative feedback. Our position with advisors has always been that fear of negative feedback is more harmful than soliciting feedback that is negative, since once the latter is realized it can be remedied.

While fear may influence action (or lack thereof) with client feedback, actual satisfaction ratings suggest the fear is without basis. For advisors who had conducted a survey, satisfaction ratings were 4.5 out of 5 for top-quartile advisors and 4.55 for all other advisors. These high scores are apparent across the industry, with Advisor Impact reporting average satisfaction ratings of 4.6 across the tens of thousands of clients they have surveyed on behalf of financial advisors. Advisors want more; they are targeting overall satisfaction ratings of 5.0, however, and the perfect score is elusive (see "Nearly Perfect," at right).

With this in mind, one might extrapolate that those advisors who solicit client feedback are more confident in their service offering and client satisfaction, and thus more likely to get high ratings. By contrast, the next logical question would be whether advisors who do not conduct surveys are less confident, and thus choose not to do surveys. Or if they were to do so, would they receive lower ratings?

In this case, we can never know. But given that delivering financial advice is a highly personalized service offering, we steadfastly believe that conducting client surveys is a best practice to be embraced by any advisor who wishes to deliver high-quality services and run a high-quality business.