Knowing your clients well is essential to client retention. A certain minimal level of client knowledge is mandatory under the “know your client” (KYC) requirement. But beyond that, the better you know your clients, the better you will be able to meet their expectations and keep them as clients.
Knowing your clients begins with a thorough discovery process that goes well beyond the KYC questionnaire, says Prem Malik, financial advisor with Queensbury Securities Inc. in Toronto. The discovery process involves gaining a deep understanding of your clients’ financial affairs, tax situation and other personal and family details, as well as their appetite for risk and how it will affect the way they achieve their financial objectives.
The discovery process, Malik adds, is ongoing. Clients’ circumstances change over time and unless you have regular conversations with them, you will not be able to manage their expectations. Otherwise, you could end up with unhappy clients who may take their business elsewhere.
Malik offers the following tips to help you get to know — and keep—your clients:
> Look beyond the KYC document
You need to know more about clients than the information provided by the KYC questionnaire, Malik says. This regulatory requirement provides an important but narrow view of a client’s risk profile.
The KYC document answers the question: “How much risk do clients perceive they can take?” The more important question, Malik says, is “How much risk can a client take to achieve their objectives?”
Try to find out as much as you can about issues such as a client’s family, work history, saving and spending habits, thoughts on fees, performance expectations and investment preferences, Malik says.
You should try to become the person your clients can come to for an opinion on financial as well as non-financial matters, he adds.
> Manage expectations
If you know your clients well, you should be able to set reasonable expectations. “Listen to what they want,” Malik says, “and strive to exceed what you promise.”
Make sure your clients understand what you do and how you work, he adds. During reviews, ask clients: “Am I meeting your expectations? Am I missing anything?”
Malik recommends that you discuss fees openly. “I like bringing up the subject of fees in the first meeting so there are no shocks or surprises.”
> Educate your clients
Don’t assume that clients understand the investments or strategies you might recommend. Educate them about why you plan to make certain decisions and explain the pros and cons of the strategies you propose. Avoid the use of jargon.
Ask for feedback on your recommendations.
> Communicate regularly
Staying in touch with your clients is essential – whether through face-to-face meetings, email or telephone. While it is typical to have either quarterly, semi-annual or annual reviews with clients, you should also communicate with them periodically through other means, such as newsletters and social media, with engaging content.
“You should be proactive in staying top-of mind,” Malik says, “and let clients know you are always on the ball.”
> Make yourself available
“You must be accessible to clients at all times,” Malik says. Clients want to know they can reach you and get answers to their queries in a reasonable time. Otherwise, they may lose confidence in you. If you are not available, make sure they can reach a team member.
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