The rules of engagement

“We wanted to dig in and really understand why it is that clients who were otherwise satisfied didn’t give the referrals that advisors thought they might,” she says. “Where there are no issues around service, what is it that makes some clients refer and others not?”

After surveying 1,000 client investors in the U.S., Advisor Impact isolated four clusters of client types: the “disgruntled,” the “complacent,” the “contented” and the “engaged.”

And those who were more likely to refer their advisors? The engaged clients — and, in most cases, without being asked.

“Look back at your business,” says Little-child, who is now conducting a parallel study in Canada for which she expects the results to be quite similar. “These are the people who have actively helped to build your business.”

It is the members of the engaged group who are most apt to give their advisors more business, be it through estate planning, tax planning or trust services. They are also more likely to refer their advisors, be it to family members — specifically, their children and parents — or to friends and associates.

Identifying engaged clients has never been difficult, says Littlechild. But now, thanks to the study’s findings, she has a much better idea of what makes a client engaged — and how advisors can cultivate these lucrative relationships.

Advisor Impact’s research found three factors that separated the contented from the engaged: their advisor’s service offering, the advisor’s service level and the client’s personal connection with the advisor. All three, when fully leveraged, can deepen client engagement and step up referral numbers.

So, how do you increase the number of engaged clients in your book? It can be accomplished in three steps.

> Step One: Build A Holistic Practice

“Engaged clients reported that their advisor’s offering was different and more holistic,” says Littlechild, “and tended to involve financial planning or wealth management.”

An engaged client is significantly more likely to have a written financial plan, she adds.

That comes as no surprise to Ted Recht-shaffen, a certified financial planner and president of TriDelta Financial Partners in Toronto. “The starting point for any advisor is: what can you do to make yourself referable?” he says. “If you sell only mutual funds, there’s not much you can do to stand out in the marketplace.”

With eight in-house employees and external relationships with lawyers, accountants and investment counsellors, as well as with insurance and mortgage brokers, TriDelta offers a full slate of financial services. In fact, Rechtshaffen is hesitant to take on clients who want him to deal only with isolated aspects of their financial lives.

“Early on in the business, we would do that,” he says. “But we won’t anymore because, frankly, we can’t show people how we’re different that way. There are thousands of people who can do that.”

Rechtshaffen attests to the power of taking clients through a full financial plan, both in terms of increasing the amount of assets they invest with TriDelta and the likelihood they’ll refer him to others.

“After we’ve mapped out a plan, most clients will say, ‘It’s a lot harder to implement this if you guys don’t have control over it. So, I’m going to move everything over to you’,” he says. “It doesn’t happen in every case, but it does happen a lot.”

Another common response, says Recht-shaffen: “Clients often tell us that this is what they have been looking for, only they didn’t know it existed. They’re really excited that they’ve found us, and they want to tell other people about it.”

Estate planning, in particular, often leads to referrals to family members. “Because of the type of work we do, it’s easier and more likely to make it a two- or three-generation relationship,” he adds. “It’s a home run, in terms of having a connection with the client.”

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> Step Two: Tell Clients What You Do And Ask Them How You Can Do It Better

The Advisor Impact study found that engaged clients both expected and received more direct contact than contented clients; engaged clients also placed significant importance on knowing the level of service they could expect.

“When we talk to clients, one of the things that becomes readily apparent is that they don’t always understand exactly what the advisor is doing on their behalf,” Littlechild says. “Advisors often don’t communicate the value they’re offering.”

According to Leo Pusateri, president of Williamsville, N.Y.-based Pusateri Con-sulting & Training LLC, this isn’t a one-time conversation: “You constantly need to ask yourself: ‘Do my clients truly know what I do?’ Clients won’t refer you unless they have a good feel for the value you provide.”

Pusateri’s firm helps companies and individuals in the financial services industry discover and articulate their unique value proposition — an important quality in a crowded marketplace. This is an important step in creating engaged client relationships.

A unique value proposition should be meaningful, compelling and one that clients are likely to repeat, Pusateri says.

“Ask yourself whether your clients can represent it powerfully with their own confidence, passion and speed in delivery,” he says. “If you wing it, they will end up winging the story of you and the value you provide.”

It should also get personal, says Mitch Anthony, president of Rochester, Minn.-based Advisor Insights Inc. and author of the upcoming book, From the Boiler Room to the Living Room: The financial services revolution and what it means to you and your clients (Wiley, $54.99).

When Anthony coaches advisors, one of the first questions he asks is why they’re passionate about the business. “If you only want to accomplish a residual fee, your clients will figure that out pretty quickly,” he says. “Instead, you need to tell clients what you can do that is of real value to them.”

A service agreement is another tool to illustrate your value. Littlechild recommends that advisors map out exactly what their fee involves, noting time spent face to face, communicating via e-mail or telephone, reviewing financial plans, rebalancing portfolios and attending continuing education courses. “Helping clients understand what you are delivering, day in and day out,” she says, “is a critical part of creating client engagement.”

Familiarizing clients with what you do can also lead clients to give referrals spontaneously. While 100% of engaged clients who participated in the Advisor Impact survey had given their advisor a referral, only 6% did so because they were asked.

“The data seem to suggest that asking directly doesn’t help,” says Littlechild. “Nor did the referrals come automatically just because the level of service was high. Instead, the advisor had to intervene in some way to ensure that clients knew the type of problems the advisor could solve.”

The bottom line: instead of asking for referrals, your time might be better spent driving home your areas of expertise. Leave the client to spot the referral opportunities.

“Talking to a client about the success you’re having in helping business owners avoid risk and increase the value of their businesses — well, that’s real,” Littlechild says. “That will prompt most people, when they’re talking to a friend about the challenges of selling a business, to think about you. That’s a big difference from asking a client for the names of 10 business owners.”

The Advisor Impact study also found that when it comes to giving referrals, engaged clients are much more likely to be concerned about their advisors’ client minimums and service levels.

“Advisors should tell clients what their minimum is,” says Littlechild. “Or reassure clients that the advisor won’t immediately drop their referral if the referral doesn’t meet the advisor’s minimum. Similarly, there are a lot of different ways advisors can demonstrate that all clients receive the same level of service.”

Client feedback can help you understand and deal with concerns that clients have about service levels and other issues. Feedback also serves to deepen client relationships.

“Even the act of sending a survey out shows clients that you are conscientious about the lines of communication,” says Al Nagy, a certified financial planner with Investors Group Inc. in Edmonton.

It doesn’t end there, however. “The key about feedback is not just that you gather the information,” Littlechild says, “but that you use it to have a deeper conversation about client views and understand what is really important to them.”

There are a number of ways to collect client feedback. Littlechild recommends a client advisory board, which she believes can have a strong impact on deepening client relationships. She also suggests client surveys, conducted every 18 months.

Your client feedback should cover:

> The Offer. Is the advisor offering the right range of services?

> The Delivery. Is the client pleased with frequency of contact? Is the advisor good at explaining financial jargon? Does the client have a clear picture of the services the advisor is performing on the client’s behalf? Does the advisor provide access to other professionals?

> The Personal Connection. Does the client feel a strong personal connection with the advisor? Does the client feel the advisor is trustworthy? Does the advisor demonstrate that he or she appreciates the client’s business? Does the client feel the advisor understands his or her goals?

While it takes a huge leap to turn a disgruntled client into an engaged one, it’s not impossible. Using client feedback to identify dissatisfied clients is the first step in turning around the relationship. “I’ve heard so many stories about clients who are disgruntled or complacent,” Littlechild says. “All it required [to get the relationship back on track] was the discussion of a few simple issues.”

Rechtshaffen can attest to that. When a client feedback survey highlighted a problem, he immediately picked up the phone. “We called a few of the clients who mentioned the weakness and asked, ‘What do you want to see?'” he recalls. “Then we used that information to figure out what we were going to do.”

At the end of the day, Rechtshaffen says, the relationships in question were the better for this process.

“Everyone makes mistakes,” he says. “But if you react to it and make up for it, you have a stronger client relationship than if you never had made the mistake in the first place.”

> Step Three: Going Beyond The Numbers.

Building and maintaining a personal connection with clients is perhaps the most intangible — and important — element of creating engaged relationships. Advisor Impact’s research found that 41% of engaged clients rated a personal relationship with their advisor as being of critical importance, compared with only 23% of contented clients.

Adds Anthony: “The first thing we have to concentrate on is the impression we leave on people emotionally, the feeling they get from talking to us.”

He recalls meeting a tremendously successful advisor and asking him to sum up the secret of his success in one word.

“He told me it was ‘curiosity.’ He has an insatiable curiosity about people,” Anthony says. “When a new client walks into his office, he wants to know everything about him or her: where the client came from, what it was like growing up, what his or her parents did. Only once he knew all that, was he comfortable starting a relationship with the client.”

For Nagy, client relationships often don’t begin until he has spent an afternoon on the links with a prospect. “Golf is a great way to understand someone’s true character,” he says. “If you spend four hours with someone on the golf course, you are really going to know what he or she is like. Afterward, both of us can decide if we want to proceed.

“Build up the relationship first,” he adds, “then the business will come. And the referrals come after that.”

Above all, creating client engagement requires going beyond the nuts and bolts of financial planning, says Anthony: “In today’s market, the consumer’s radar is way, way up on self-interest.”

Rechtshaffen concurs: “If we really want to stand out, we have to do more than just the numbers.”

For example, he recently put a client facing a personal problem in touch with another client who was an expert in that field. “Those are the kinds of things people remember a lot more,” he says.

Making clients feel appreciated is another important element in creating and maintaining engaged relationships. Advisor Impact’s research found that engaged clients place greater importance on working with an advisor who demonstrates that he or she values their business.

“It could be as simple as saying it, or hosting a client appreciation event or education session, or making an annual charitable contribution in the client’s name,” Littlechild says. “It’s really just a way of reaching out and reminding people that you really do value their business.” IE