No matter how strong your message, clients get distracted. Never has this seemed truer than in the last few years. With their eyes on the volatile market, it is difficult to keep clients focused on a vision of the future.
In fact, in the latest Russell Financial Professional Outlook, 78% of advisors reported that clients were worried that economic uncertainty would keep them from reaching their goals. At the same time, 49% said many clients were unwilling to take on enough risk to meet their goals for investment returns.
Constant communication is key. If you don't reach out and communicate consistently with clients through market ups and downs, they may lose confidence in your advice just when the stakes are highest-at the bottom of the market.
But the focus of your communications is equally, if not more, important. Even when clients like and trust their advisor, they often don't understand where the advisor is taking them and why they are paying fees. Over time, they may begin to question whether they're getting their money's worth.
The engagement and trust of your clients depend on how well you are able to focus on each client's vision and unique circumstances. You must keep the discussion going and prove your value beyond investment performance.
This may seem obvious, but many advisors construct businesses that prevent them from having the time to do it well. They may have too many clients to serve them each effectively and are forced to be reactive. And time and again, it's the clients with the least money who tend to be the main worriers who take up your time, too often at the expense of your best clients.
Over the past decade, Russell has used a tool that equips advisors to plot out the next two years, quarter by quarter, holding them and their clients accountable to action plans and progress toward identified goals. We call it the Client Engagement Road Map and, in the past four years alone, my team and I have used it in our coaching with more than 375 advisors, helping them build their practices.
The Road Map structures communication with clients so that you provide a thorough explanation of their total financial picture, spur discussion about goals, set expectations about interaction, pinpoint areas that may require additional resources such as estate and tax planning, and establish yourself as the quarterback, coordinating services and advice from other professionals. The goal-a stronger relationship with high-net-worth clients (see "Staying on Track," page 114).
"The Road Map holds me accountable to look into certain topics and areas," says John Bender, senior vice president and managing director of the financial services group at Seattle-based E.K. Riley Investments. Bender has been using the Road Map with clients for the past three years.
"It helps clients see me as having a clear plan and following through on every step," Bender says. "I've also found it to be a very effective tool to preview with prospective clients so that they can get a sense of the value of our informed and consistent process."
"We can clearly attribute business growth to the Road Map," he adds. "For example, it has helped us to engage and grow one of our stagnant $1 million clients to $5 million. And there is clear indication from this client that we will be called on to do more."
During the latest market downturn, advisors using the Road Map found they could redirect a client's focus to long-term strategy from fear. Seeing the map every quarter reminded the client of the investment principles and relationship they had established with the advisor.
"It really helped to keep both sides focused, and it managed expectations in the client's mind," says Doug Skinner, a partner at Springfield, Ill.-based Skinner Copper & Ehmen Wealth Management. He has been using the Road Map with high-net-worth clients ($500,000-plus) since 2007. "Rather than reacting to the short-term performance of their asset allocation, clients would stay focused on the agreed planning activities for that quarter, for example, addressing estate planning or insurance needs."
REFOCUSING A PRACTICE
The Road Map also helps advisors refocus their practice-from insurance to investments, commission to fees, or investment advice to wealth management. For example, insurance sales typically require significant client interaction and energy up front, but it is sometimes difficult to create meaningful ongoing interaction. The Road Map is quarterly and demonstrates that your process is disciplined, suggesting that you can handle more than insurance.
When Russell has advised planners shifting to fees from commission, we find that the Road Map helps persuade clients to stay. For Skinner Copper & Ehmen, the Road Map has led to opportunities for more holistic planning across a client's entire asset base, even if the firm is not directly managing all the individual assets. Planners have also used the Road Map effectively with qualified plans, endowments and foundations.
Advisors like Skinner and Bender also have completed Russell's yearlong strategic planning program, including quarterly sessions and monthly coaching calls. These results are a combination of best practice implementation, unwavering commitment to client service and thoughtful strategic planning.
The Road Map represents a mind shift for many advisors. As a prerequisite, we recommend thinking of ways to free up energy, often by reducing the number of clients you work with or creating second-tier clients.
The Road Map is designed for high-net-worth clients who are typically generating more than $5,000 of recurring revenue. To avoid being overwhelmed, we advocate rolling it out to just one or two clients a month. We also suggest you pick one client who you like and who likes and trusts you, and ask for their feedback on this new service.
Using the Road Map helps you to establish a disciplined rhythm for your high-net-worth clientele. We encourage you to take the opportunity to work with your clients in a structured way that facilitates regular, ongoing feedback and more open conversation, regardless of what the markets are doing today.
Kevin Bishopp is the director of practice management for Russell Investments in Seattle.