Many believe that for any registered investment adviser striving to grow a business, it's all about performance. Wrong! Increasing client retention is what is critical.
Many believe that for any registered investment adviser striving to grow a business, it's all about performance. Wrong! Increasing client retention is what is critical.
Performance counts, but client service is more important — for your business and for your clients' success.
Performance alone won't get clients to their long-term goals. Behaviorists have long proven that investors are regularly their own worst enemies, especially in extreme times — good and bad. Exchange-traded fund and mutual fund flows spike with volatility — ill-timed, reactive buying and selling. If you don't help clients stay disciplined, it won't matter how good your returns are. Clients who succumb to behavioral backfires erratically miss long-term returns, jettisoning their goals.
And if the focus is only on performance, service often grows stale, falling by the wayside.
But it's more than just “service” — singular — that's needed.
One overlooked, discouraging development in our world is the tendency toward one-note service.
DIVERSE MENU
Investors have varied interests, communication needs and wants. Some love talking about markets. Others aren't interested in the nitty-gritty and prefer a quick hit. Many like building a personal relationship with their primary contact. Some crave reassurance whenever markets wobble. Some want face-to-face contact, others prefer the phone and still others like sticking to email, letters or video.
But many advisory firms offer just one or two communication modes. The trouble is, clients aren't one note, and many receive information differently. Offering a variety of delivery methods raises the odds you click with each client, which helps you reduce your termination rate and better serve clients.
Firms have varied, unique service models, and you needn't mimic every single offering. You simply need a diverse menu of features catering to different communication preferences — and via multiple delivery systems. Have a few offerings for clients who crave eyeball-to-eyeball contact, a few for those preferring the phone, some for the uber-busy folks who rely on email, written materials for those who love reading ... videos, infographics and so on.
My firm's investment counselors are in California and Washington, so we do lots of phone and email. But we also hit the road to see clients in person.
We hold big client-only seminars annually in most metropolitan areas. For those who prefer smaller events, our research and service staff host roundtable discussions and more intimate presentations such as at lunches and dinners to serve working and retired folks alike. We also hold educational workshops for those keen to learn how markets work, and include their family members and beneficiaries. All help us serve clients in person, in addition to phone and email contact. Not all clients attend, but many thousands do.
'PLURAL COUNTS!'
National face-to-face programs are tougher for smaller firms whose clients are half local and half far-flung. But try as hard as possible to offer as many different types of service as possible. Services — plural counts!
Can't reach certain areas? Try hosting events online, where clients can stream the presentation and submit questions in real time.
Vary your written materials as well: in-depth reports, one-pagers and versions in between.
Providing services, not just service, cements your relationships. It gives you avenues to help keep your clients on track, especially in extreme moments, when folks are most prone to self-destructive decisions. We've all seen emotional investors react to market movement, usually to their own detriment. The stronger your client relationships, the more they'll accept your tough-love advice through huge market swings.
Our job as investment advisers isn't to be yes-men and yes-women. It's to counsel — guide clients along the path that's best for them. Steer them back when they lurch. Ensure they capture bull market returns if their needs require long-term growth. Help them resist the temptation to chase heat. Coach them through volatility so they don't lock in losses near market troughs, missing the rebounds. Always keep their long-term needs in mind.
Fear and greed are powerfully dangerous diverters. How many of your clients wanted to flee stocks near the 2009 bottom, or even in a relatively minor headline-laden correction? How many asked to ditch diversification for something hot and narrow late in some bull run? How many wanted to overload tech in 1999? How many never wanted to own stocks again in March 2009?
Clients need to hear from you when their feelings put their needs and goals at risk. They need to hear it from someone they know and trust. Otherwise, they'll hurt themselves.
STRONG FOUNDATIONS
Investment advice means telling clients what they need to hear, not what they want to hear. If you've built strong foundations through services with each client, you have the best chance of success. They'll know you're looking out for them. They'll understand the reasoning, philosophy and values behind your recommendations, which breeds comfort. They'll know their interests come first. You won't win everyone over, but you'll help far more often than not.
Yes, performance matters. But services are what help clients receive much needed results over the long term. The more services you provide, the more you help folks stay on track.
Ken Fisher is the founder, chairman and chief executive of Fisher Investments, a registered investment adviser with more than $65 billion under management.
