Advisors tend to excel in planning for their clients' financial needs, but are they falling down on another critical part of the job?

Many of today's advisors have not formalized their client communication practices, a misstep that could hamper long-term business success, according to the FPA's recent Trends in Client Communication Study, conducted in collaboration with Advisor Impact CEO Julie Littlechild.

"We're seeing that a lot of advisors have not put the proper planning in place when it comes to client communication," says Valerie L. Chaille, director of the FPA Research and Practice Institute which produced the study. "The more in touch advisors are with their clients the more likely they are to stay."

Less than half of the advisors surveyed (44%) indicated they communicate service standards -- such as frequency of contact and response times -- to new clients. Of advisors who do inform clients of their service standards, only 15% do so in a written agreement.

“The reality is that an advisor can have a great client communications plan but if it is not formalized and communicated, the value is significantly reduced,” said Littlechild in a statement. “There is a discipline to defining, assessing and communicating a plan and, based on the data, there is room for improvement across the industry."


Sixty eight percent of advisors surveyed indicated that they gather client feedback in some form, with 83% doing so informally and 41% collecting feedback with a written or online survey. Female advisors are more likely to gather client feedback (77%) compared to their male counterparts (65%).

"The fact that there isn't a lot of consistency to how advisors are getting feedback is problematic," says Chaille.

A small percentage of advisors (10%) receive feedback in the form of a client advisory board, an initiative Chaille started at her firm in 2008. She says it has proven very effective for her Indianapolis-based firm, SummitView Financial.

Her advisory board includes one person for each client segment. She seeks board members who will give honest opinions and who have the time to devote to it. "[The client advisory board] has been very valuable to me," Chaille says. One particularly helpful piece of constructive feedback she received: Get rid of the weekly newsletter sent to clients. The move proved to be a huge time-saver for her, she says.

Scott Kahan, a CFP and the founder of New York City-based Financial Asset Management Corporation, says he used to regularly conduct surveys with clients, but now opts to only do so every few years. Instead he receives helpful feedback from informal conversations during meetings. "We don't want to overwhelm our clients," Kahan says. "We get good feedback based on discussions." 


Chaille, a CFP, says that when she first entered the industry at American Express Financial Advisors (now Ameriprise) it was required that advisors hold all meetings with married couples together and not as individuals. But according to the FPA study, 18% of advisors say fewer than half of their married clients take part in planning meetings as a couple.

This can be problematic for both clients and their advisors. When the spouse who primarily handled the family finances passes away, Chaille says, the surviving spouse may move his or her assets to another advisor, especially if there was ineffective communication leading up to the death. "If planners are not getting to that other spouse, what is it going to be like when the other spouse dies?"

Kahan, who founded Financial Asset Management in 1986, also strives to communicate with both partners. "It is important to meet both spouses and communicate with both," he says. To that end, Kahan makes sure that all email correspondence is sent to both parties and he asks both of them to attend meetings together, even if one is more engaged on financial matters than the other.  

He also notes that a lot can be learned from face-to-face communication with both members of a couple. "Understanding how they communicate with each other is important and you only learn that by sitting down with each other," he says.  


When asked about important changes in communication, advisors pointed to the rise of alternative ways of connecting with clients such as social media and web-based video conferencing tools. Of social media sites used for professional purposes, LinkedIn led the way among surveyed advisors (82%) followed by Facebook (26%), Twitter (22%) and Google+ (22%).

One younger advisor who has embraced newer communication tools is Evan Bedel, a CFP with Bedel Financial Consulting in Indianapolis. With clients across the country as well as overseas, Bedel, 31, regularly uses video conferencing tools like Skype and FaceTime for client meetings.

"Skype and FaceTime are very important, because the rapport established with face-to-face connection allows for a more 'sticky' relationship than a conference call," he says. "Going forward if financial planners limit their target clientele to the standard 40-mile radius, they will be a step behind."

The FPA's 2014 study, which surveyed 411 advisors across all channels, follows the inaugural FPA Research and Practice Institute study released last year that also showed a major gap in client communication among advisory firms.

The breakdown of survey respondents included 29% independent RIAs, 25% from national, regional or independent broker-dealers, 16% from wirehouses and 12% who operate in a hybrid model. More than three quarters of those polled (76%) were male with more than half of all participants (52%) were between the ages of 40 and 59.

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