Pop quiz: How would you prefer to spend your time?

A. Constantly hunting for new prospects and converting them to clients.

B. Doing very little marketing and instead focusing on serving highly loyal clients who give you more of their assets to manage.

Of the thousands of advisors I have met and worked with over the years, there are probably fewer than 5% who would choose A.
The fact is, we all want ideal clients who stick with us over time and give us more of their trust and assets and who also introduce us to their affluent peers. A devoted, delighted client base is vital to creating and growing a truly exceptional practice.

What’s more, having an exceptional practice is more important than ever.
Although many financial professionals will be able to earn a good living for some time to come, we are moving toward an environment where relatively few professionals earn most of the rewards. The advisory world is becoming a place where the winners might not take all but they will take most.

Building Loyalty
Regardless of whether a firm focuses mainly on investments or goes beyond asset management to include wealth and advanced planning services, it needs loyal clients. To get them, firms must adopt what I call the six Cs or six factors that drive client loyalty.They are character, chemistry, caring, competence, consultative, and cost-effective.

There are four foundational factors: character, chemistry, caring and competence. These four core qualities work in lockstep.

If wealthy clients see an advisor as being very caring, then they are highly likely to conclude that person has character and is competent and that the chemistry is good.

But having a foundation of character, chemistry, caring and competence will have little impact on how clients view an advisor when it comes to being consultative or cost-effective.

Let’s consider each one individually.

1. Character. Character entails the personal qualities clients want in their financial professionals. The three most important of these qualities are integrity, trustworthiness and dependability. When we talk to financial professionals about character, they all profess it to be important and assert that they have integrity and are trustworthy and dependable. Unfortunately, we have found that many have a difficult time communicating character to their clients.

2. Chemistry. Chemistry is the ability to be in synch with clients. There is chemistry when an advisor “connects” with them. Advisors know what clients like to talk about and see eye to eye with them on important issues. Chemistry is something that can’t be faked, which makes it vital for advisors to focus on working with people they really like and “get” on many levels. Serving only clients who are ideal for an advisor’s skills and interests will help build chemistry as nothing else can.

3. Caring. Caring is about empathy and truly knowing what is most important to clients and not just their financial goals and objectives. Advisors must communicate that they really do have a good grasp on their world.

4. Competence. The more that an advisor can demonstrate and communicate competence, the more loyal clients become. Most clients consider their financial professionals to be exceptionally technically capable. Clients also tend to believe that their financial professionals are extremely smart. A strong sign that clients consider an advisor to be competent is when they think that the advisor is recognized as a leading expert by peers. Thought leadership, including publishing articles and white papers and getting endorsements from key influencers in a chosen client niche, does wonders for perceived competence.

5. Consultative. Being truly consultative is the most decisive factor in creating loyal clients, regardless of business model. There are three central components:

  • Cooperative orientation. It isn’t about always doing for clients, as most prefer a more collaborative relationship.
  • Contact parameters. Advisors build loyalty among clients when they contact them appropriately, not just on a schedule, such as a quarterly investment review.
  • Customized communications. Instead of off-the-shelf presentations, create communications that truly connect with each client.

To communicate the message effectively to clients, it is very useful to connect with them about the benefits that the firm provides.
6. Cost-effective. Clients are generally becoming more price-sensitive value. They are forcing many financial professionals to lower the costs of their products and services whenever they can. The truth is that this is not about cost but value. Most wealthy clients are willing to pay without debate for high-quality financial solutions.

Clients focus on costs when their financial professionals fail to focus on value. They want their advisors to deliver cost-effective solutions. This means not only providing value but also making clients recognize that the advisor is providing value.

APPLYING THE SIX IN PRACTICE
The six Cs are all in the advisor’s control. Act in ways that communicate caring, that demonstrate competence and that help clients see the advisor as consultative. Consider each factor and how to seamlessly integrate it into the practice.

Regardless of whether an advisor focuses on investments, basic financial planning or more advanced planning strategies, character and caring are essential across the board. Chemistry becomes increasingly important for wealth managers who are trying to support the full range of clients’ financial issues.

Chemistry and the other factors lead to greater client rapport and openness. Wealth managers offering complex planning solutions need this rapport to conduct more comprehensive client evaluations and identify where wealth management strategies and products can make a major difference.

The importance of being competent, consultative and cost-effective increases as an advisor offers additional services and products.

Taken together, these characteristics attract the right affluent clients, create authentic loyalty and act as the glue that holds the advisor-client relationship together over time.

Excelling in all six of these qualities requires an advisor to build the right systems and processes and have the right people in place to deliver to clients a consistently strong experience. This demonstrates that an advisor is exactly the right person to help them make smart choices about their wealth.

This story is part of a 30-30 series on savvy ideas on modernizing your practice. This story was originally published on Aug 15.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access

John J. Bowen Jr.

John J. Bowen Jr.

John J. Bowen Jr., a Financial Planning columnist, is founder and CEO of CEG Worldwide, a global coaching, training, research and consulting firm for advisers in San Martin, California. Follow him on Twitter at @CEGAdvisorCoach.