Whether it’s taking time out from a family holiday to return a phone call from a client or hosting a sushi-making class for a group of clients, Michael Savelson is a big believer in delivering a deep client experience.

“We’re there whenever they need us to be there,” says Savelson, a personal financial planner with Investia Financial Services Inc. in Montreal.

Savelson’s efforts don’t always generate immediate revenue. But that is not why he does it. Rather, client satisfaction is critical to his business model, which is built strictly on referrals and growing his existing client base.

Linking client satisfaction to growth isn’t anything new. For years, referrals have been regarded as the gold standard of a successful practice. But new research from Toronto-based research firm Advisor Impact Inc. indicates that the growth of an advisory business should no longer be considered a separate function from the day-to-day management of clients. Once upon a time, the time spent growing a business and the time spent dealing with clients were seen as separate — even competing — interests, says Julie Littlechild, president of Advisor Impact. Now, researchers and advisors are realizing how deeply the two are linked.

The Advisor Impact study, commissioned by Toronto-based Univeris Corp., a provider of wealth-management platforms, surveyed 1,088 advisors, with equal representation from the mutual fund dealer and investment dealer channels. The survey asked how advisors manage and grow their client relationships, then looked for the ways the advisors’ business processes were linked to that growth.

The link, it turns out, is strong.

“We need to redefine the way we think about growth,” Littlechild says. With only 8% of respondents saying they have completely optimized client relationships, she adds, there is clearly room for advisors to grow their existing client bases as a source of both new revenue and referrals.

Even more compelling, the study found a subset of advisors who, regardless of how long they have been in the business, consistently describe themselves as “very effective” when it comes to meeting their goals for the majority of their clients. These so-called “high-contact advisors” — because they tend to meet with their clients more often than the average advisor — do a number of things more effectively and efficiently than their peers.

For starters, high-contact advisors seem to like nothing better than formalizing their business practices to meet their goals. So, they are more likely to have a formal process in place to manage client relationships. For example, 70% of these high-contact advisors create financial plans for their clients, while only 56% of the other advisors surveyed do so.

High-contact advisors also have fewer clients, adds Stephen Smith, senior director of marketing with Univeris: “The smaller number of clients clearly allows these advisors to focus energy and efforts on supporting and serving those clients.”

These advisors are also more profitable, proving that being effective pays off. Indeed, high-contact advisors do a lot of things right. Littlechild used the data from the survey and some of the techniques used by high-contact advisors to create a five-step road map to success.



1. Define Your Target

Littlechild admits that the first step in the process — identifying your ideal client — isn’t new; the survey just reinforced its importance.

By looking at advisors’ profitability per client and the frequency with which advisors establish criteria for ideal clients and stick to it, the survey showed that defining your target pays off. Conversely, Littlechild says, failing to know your ideal client — and what he or she wants, needs and expects — can lead to a downward spiral when it comes to meeting other business goals.

The Advisor Impact study found that high-contact advisors consider 90% of their clients ideal, compared with 77% of clients for mid-contact advisors and only 70% for low-contact advisors. And high-contact advisors not only define their target clients but also adhere to their ideal-client profiles.

As well, high-contact advisors have fewer clients — 189 on average — but significantly more assets under management per client: $278,000 on average. The average mid-contact advisor has 100 more clients and average AUM per client of $169,000. Low-contact advisors had much larger rosters — juggling almost 400 clients on average — and have AUM per client of only $82,000.

@page_break@High-contact advisors, then, understand the relationship between profitability and ideal clients. They understand that if a client is not profitable enough to justify an annual meeting, the time and energy spent on this client can drag the whole business down. That time and energy could be spent growing the business through contact with more profitable clients.



2. Define The Service Experience

This step focuses on setting client service goals that make sense economically yet serve clients well. “It’s like a checklist, if you will,” says Smith.

Top advisors tend to offer clients a more intense service experience — be it the level and frequency of contact, the client appreciation events or education activities.

For instance, 61% of high-contact advi-sors offer educational workshops, vs an average of 51% for other advisors. Web sites and newsletters are also more popular with high-contact advisors than they are with their average colleagues. And when it comes to client appreciation, top advisors go the distance, with 77% sending out special occasion cards (vs an industry average of 69%) and 75% hosting social events for clients (the average was only 57%.)

Customer appreciation goes a long way toward generating referrals, says Savelson. Besides the sushi class, he has hosted wine-tasting sessions and art gallery visits. But it’s not just the grand gestures. He sends out signature boxes of chocolates during the holidays. “Everybody looks forward to that,” he says. And he makes sure that his clients’ children receive birthday cards with gift certificates for ice cream on their birthdays.

However, all of these outreach efforts are merely icing on the cake. The main service experience Savelson wants to convey to his clients is “reliability and dependability.” He adheres to a 24-hour maximum lag on returning client calls, even while on vacation.



3. Execute Effectively

This step is all about standardizing the client-relationship process.

“We wanted to know what levers we could pull at our end to help advisors really drive growth,” says Univeris’ Smith, whose firm provides software tools to help advi-sors standardize their front- and back-office operations.

Again, the Advisor Impact study discovered a significant gap between high-contact advisors and everyone else. When it comes to creating financial plans, for instance, 70% of high-contact advisors have a process in place; the average is 56%.

High-contact advisors are also more likely to set formal portfolio analysis and review meetings with clients than other advisors are: 70% of high-contact advisors do this, vs 56% of everyone else.

“When you think about it, that portfolio analysis meeting is the moment of truth in the relationship,” says Smith. “The fact that more people don’t have a process around it jumped out at me as an opportunity for advisors.”

The survey also looked at the impact of automation on delivery of services to clients. It found that a slight majority (55%) of high-contact advisors have automated their meeting processes. Indeed, high-contact advisors are more likely to be delegators than the rest of the field: 43% of top advisors surveyed say they sometimes delegate meetings to a junior advisor; the average was only 18%. Yet the majority of all advisors consider it critical to have the right team members in place to meet business goals.

Very few advisors, however, are attracted to the business because they have a skill at developing processes, as Littlechild points out. She adds: “Having someone on the team who thinks methodically can be helpful.”



4. Communicate Your Plan To Clients

Sean Burke, a certified financial planner with Dunsmore Burke Financial Planning Group in Westmount, Que., would not be considered a high-contact advisor if the number of clients were the only criterion. With 315 client households, Burke might appear to be biting off more than he and his two assistants can chew.

But he has segmented his clients into three tiers, each with its own level of service and corresponding fee structure. He manages about 75 top-tier — whom he calls “preferred annual” — clients who pay an annual fee based on AUM. These clients sign a letter that outlines exactly what services they can expect from Burke and his team.

“They are guaranteed a minimum of two face-to-face meetings a year,” he says, adding that there is usually more contact through e-mail and phone. These clients are also first in line when it comes to returning phone calls.

The second-tier clients, whom Burke calls the “preferred blue file” clients, number about 60. They usually have one annual face-to-face review meeting and are charged by the hour — his team keeps a log and bills these clients once a year. The remainder of his clients are simply “blue files” — they have the choice to pay hourly or by commission, depending on their needs.

With this system, Burke says, clients know exactly where they stand and what they can expect. Once a year, he revisits the status of each client and, with the client’s input, might bump him or her up or down, depending on the previous year’s activity.

It’s not always the most pleasant conversation, he admits. But rarely is a client shocked by his suggestion. “For the most part,” Burke says, “they’re reasonable and they go along with what we suggest.”

Littlechild agrees that there’s no sense beating around the bush when it comes to client segmentation. A study she conducted in 2008, which looked at client loyalty, indicated that the most engaged clients were also the most profitable — and they knew what to expect from their advisors. “The very process of communicating that to clients,” she says, “reinforces the value of what you’re delivering in the first place.”

But this step is not simple for advisors. A large percentage of advisors haven’t defined the service experience in the first place, she says. And then there are those advisors who are reticent about sharing their service goals with clients, in case they can’t meet the objectives they’ve laid out.

“There’s a fear,” Littlechild says, “that maybe they’ve set the bar too high.”

The bottom line: advisors have to analyse their businesses and realistically assess the service level they can deliver. “How many clients can you manage, and are you able to deliver on the promises you’ve made?” Littlechild says. Knowing your capability links back to doing a proper analysis of your business, she adds.

“You don’t want to overpromise or underdeliver,” says Burke. “It has to be clear what the client expects and what we expect from the client.”



5. Measure Performance

The last step on the road map to business growth is as familiar to advisors as the previous steps — yet, it’s the last holdout for many advisors. When it came to tactics to deepen client relationships that advisors wanted to implement but hadn’t, “getting feedback” topped the list. Of the advisors surveyed, 60% want to gather feedback but haven’t yet started. Only 16% of advisors said they formally gather feedback, whereas 44% claimed to do so informally.

It takes courage to hear what clients have to say, says Smith, but it’s a necessary step. It helps align all the other steps.

Burke arranged for a client survey this past spring and admits he felt slightly nervous about seeing the results. But he’s happy he did it. “It was reassuring” he says, “because, for the most part, clients gave us good results.”

Still, it wasn’t strictly an “I’m OK, you’re OK” exercise. It became clear that several clients were concerned about retirement and estate planning and wanted more information on these topics. Because of that feedback, Burke is arranging a couple of seminars to address those issues for his clients.

“I’ve never been a seminar person,’ he says, “but, at least, if we’re going to do it, we’ll do it in areas in which the clients have expressed interest.”

Savelson, meanwhile, has been conducting regular reviews every two years since 2004. “It seemed clear that third-party measurement was the way to go,” says Savelson, who commissions Advisor Impact to conduct his surveys.

He has found that much of the feedback confirms that he’s on the right track in many areas. But it has also helped him decide how to evolve his business to accommodate his clients’ needs. For example, several families with kids who were entering adulthood said that they are interested in multi-generational financial counselling.

Because of that feedback, Savelson has instituted a program in which he invites clients’ children, once they turn 18, to a meeting along with their parents. They discuss education costs, spending habits and the benefits of saving. From there, he bases future meetings on the parents’ wishes.

Savelson has conducted family meetings for about 15% of his clients, and he imagines that this will grow as his business evolves to affect almost every client family.

Whether or not you use client surveys, it always helps to take a critical look at what you’re doing, says Littlechild: “I’m a big believer that stepping outside your business and looking in is a good idea.”

There’s no single right way to do this, she adds. It’s a matter of stepping back, taking an objective look at your business and determining what needs to be changed. Some advisors do this annually; some do it quarterly; others do it every day. IE