Several years ago Neal Clemens, founder and president of Covenant Financial Advisors, noticed that his financial practice had become more like a chore than a satisfying way to advance in his profession.
Taking advice from RBC Correspondent Services, Clemens started bringing some of his clients out on the town. He called the wife of one client, and made secret arrangements to treat him to lunch, along with the client’s friend. On another occasion, he took a group of patrons out see a production of “A Christmas Carol” in downtown Cleveland, as a client appreciation gesture.
Both times, Clemens skipped shoptalk. At least he tried to. His guests however, wanted to talk about business, and both situations have produced active ongoing talks for Covenant Financial Advisors, based in Walnut Creek, Ohio, to add his client’s friend as a client, as well as several theatergoers from the Cleveland trip.
“There is no question that the money will come back to us eventually, because of the good will it instills,” Clemens said in a recent telephone conversation.
Clemens picked up this tip, and other practice management training, during a 12-month program that RBC Correspondent Services offers to its advisor clients. The business unit is part of RBC Capital Markets, and reaches about 8,040 financial advisors through several channels, including its correspondent clearing, and the registered investment advisory (RIA) servicing and custody business that it bought from J.P. Morgan Chase early last year.
Taking clients out in a relaxing setting to discuss softer life issues does not always come naturally to financial advisors. Neither does drafting a detailed business plan, according to Steve Scherbarth, director of wealth management services for RBC Correspondent Services. Unfortunately, that lack of foresight often leads to mediocrity in the financial advisory profession. After observing the business during his 29-years of experience, Scherbarth said, he estimates that about 80% of financial advisory firms do not survive past the fifth year. When they do, they often plateau.
“We think you can be more successful, help more people and find balance in your life,” Scherbarth said. “It really is about business planning.”
Advisors cannot face a client, tell him or her to get a plan for retirement and educating his or her children, yet not have a plan for the business.
RBC Correspondent Services tutors advisors in four critical areas of practice management: business management, marketing, client relationships and resource management. Of all those areas, client relationship management is the one where advisors flounder the most.
You might not think so, especially for an industry where so many practitioners say they got into the business to help people. Yet Scherbarth has sobering words for anyone who thinks benevolence alone translates to effective client management. “There is a very low level of competency. We spend a lot of time talking about making yourself indispensable to clients.”
It is all about creating—in Scherbarth’s words—a wow experience. Keeping clients satisfied, so they come back to the firm to handle bigger pieces of their financial lives, Scherbarth said.
“Ask them questions that they’ve never be asked before,” Scherbarth said. “People like to talk about themselves more than anything. It can help them in a way they’ve never been helped before.”
Clemens admits that he needed help on those ‘wow’ factors. It became clear after he saw an illustration of how much time advisors spend on tasks like answering calls and organizing paperwork, which could be spent on revenue-generating activities instead. “When I looked at where I was spending my time, was at the high end of the revenue band,” Clemens said. “I couldn’t figure out how to get past it.”
Eventually, Clemens decided to hire a junior advisor to help him handle the in-office tasks that had been taking up so much of his time. He also learned to concentrate on building relationships with existing clients, rather than falling into the trap of recruiting clients to the firm in an almost indiscriminate way.
Covenant Financial Advisors has a strong following among local pastors, Clemens said. Using some of the techniques from the RBC program, he has developed tighter relationships with some of his pastor clients, and been allowed to do educational presentations for several congregations.
Clemens said the program helps him think about client activities in a more focused, deliberate way. More importantly, it has given Covenant Financial a framework and plan to build on.
