Hear No Evil - Business Management for Financial Advisers

Despite the potential for such enhancements, only about a third of advisers have surveyed their clients in the last twelve months, according to research by Advisor Impact. And although some advisers point to a lack of time or expertise as the primary obstacles to conducting a survey, the fear factor tends to top the list of self-imposed barriers.

Some advisors are afraid to hear from their clients. In a market as competitive as financial services, existing customers on average tend to be highly satisfied or else they would leave. Our research confirms that argument in practical terms.

As part of a joint venture between Advisor Impact and Moss Adams LLP, we surveyed more than ten thousand clients on behalf of financial advisers across North America. No adviser got an overall satisfaction rating lower than four out of a top score of five. Yet that process also revealed that between 2 percent and 10 percent of clients are, in fact, at risk of defecting.

This is a very disturbing percentage considering how many advisers believe their clients are perfectly content. Surveys done in Canada, the United States, and Australia all have identified “managing client expectations” as among the top sources of anxiety for financial advisers. With so many things competing for your time, it’s helpful to find efficient tools that allow you to probe these expectations.

What’s more, in an environment where competition is intensifying and the offerings from banks, CPAs, law firms, and other wealth managers are becoming more responsive, client surveys are a vital intelligence gathering tool.

Your practice may not be geared toward “cross selling” in the traditional sense of a bank or brokerage firm, but retaining clients is a form of selling that every professional adviser must be conscious of. Clearly, a client survey can provide insight beyond what can be gained from regular client contact, because it allows the person to respond without being confronted or having to look the adviser in the eye.

Many advisory firms get the 85% of revenue from the existing clients. And the advisors tend to spend the money in attracting new customers than in maintaining the relationship with the old ones. So the client surveys can improve overall client profitability. Properly conducted , the survey shall improve efficiency, loyalty, time management, and productivity of the staff. Systematically knowing the issues from these surveys helps the firms to manage their costs and also attracts assets, drive revenues.

Improving Client Profitability

Improving Client Profitability

A comprehensive study published in the Harvard Business Review in 2002 reached some strong conclusions in favor of surveying clients. The study found that clients surveyed for a large financial institution were more than three times as likely to have opened new accounts, half as likely to have defected, and were more profitable for the firm than clients who were not surveyed. The study noted that these results, which peaked after three months, extended for up to twelve months after the survey.

The two factors explain the results. Firstly, the survey reminds clients that they should appreciate the services you offer. Clients are generally unlikely to have spontaneous thoughts about you unless reminded or asked explicitly. Secondly, asking clients questions about specific services.

A properly performed client survey will uncover the following:

  • Satisfaction
  • Expectations
  • Preferences
  • Interests
  • Referral propensity
  • Your share of wallet
  • Client profile

Such insights enhance your value to clients and their value to you.


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