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 financial advisors I’m 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.

John J. Bowen Jr. is a Financial Planning columnist and CEO of CEG Worldwide, a global coaching, training, research and consulting firm for advisers in San Martin, California.

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.

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Six Cs for cultivating customer loyalty
Here are six ways to cultivate a relationship with your client that lasts from Financial Planning columnist John J. Bowen Jr.

BUILDING LOYALTY
Regardless of whether you focus mainly on investments or go beyond asset management to include wealth and advanced planning services, you need a loyal clientele. To get them, you need to adopt what I call the six Cs — six factors that drive client loyalty.

  • Character
  • Chemistry
  • Caring
  • Competence
  • Consultative
  • Cost-effective

There are four foundational factors: character, chemistry, caring and competence. These four core qualities work in lockstep. If wealthy clients see you as being very caring, then they are highly likely to conclude that you have character, that the chemistry between you is good and that you are quite competent.

But having a foundation of character, chemistry, caring and competence will have little impact on how clients view you 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.

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Chemistry is something you cannot fake, which makes it vital to focus on working with people you really like and “get” on many levels.

2. Chemistry. Chemistry is the ability to be in synch with your clients. You have chemistry when you “connect” with them. You know what your clients like to talk about and you see eye to eye with them on important issues. Chemistry is something you cannot fake, which makes it vital to focus on working with people you really like and “get” on many levels. Serving only clients who are ideal for your skills and interests will help you build chemistry as nothing else can.

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

4. Competence. The more you can demonstrate and communicate your competence, the more loyal your clients become. Most clients consider their financial professionals to be exceptionally technically capable. Clients also tend to believe their financial professionals to be extremely smart. A strong sign that your clients consider you to be competent is when they believe that you are recognized as a leading expert by your peers. Thought leadership — publishing articles and white papers, getting endorsements from key influencers in your chosen client niche — does wonders for your 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’s not about always doing for your clients, as most prefer a more collaborative relationship.
  • Contact parameters. You build loyalty among your clients when you 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 your message effectively to clients, it is very useful to connect with them as to the benefits that you are providing.

6. Cost-effective. You may have noticed that 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 of the matter 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 your clients recognize that you are providing value.

APPLYING THE SIX IN YOUR PRACTICE
The six Cs are all in your control. You can act in ways that communicate caring, that demonstrate your competence and that help your clients see you as consultative. Consider each factor and how to seamlessly integrate it into your practice.

Regardless of whether you focus 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. If you’re a wealth manager offering complex planning solutions, you 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 you offer 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 you to build the right systems and processes, and have the right people in place, to deliver to your clients a consistently strong experience. This demonstrates that you are exactly the right person to help them make smart choices about their wealth.

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.