Financial advisers must improve client engagement

Nov 17, 2022

Suresh Sadagopan, Managing Director and Principal Officer, Ladder7 Wealth Planners, and author of If God was your Financial Planner, believes that improving client engagement is key to establishing yourself as an astute financial adviser.

The Adviser’s role.

While a client approaches us for our competence and capabilities in the financial sphere, we need to realise that finances are but a tool to achieve their goals and objectives. It is a means to help them realise their dreams.

Clients are generally busy with work and their own responsibilities and family, leaving the advisers to anchor the financial aspects. Hence, advisers must understand the hopes and fears of their clients.

Advisers need to ensure that their clients do not make the typical mistakes most investors do, that they do not make adhoc decisions and derail the entire plan.

Advisers need to manage the behaviour of their clients to ensure their client’s own well-being.

The Client's perception.

While advisers assist their clients thus, there is a difference in what clients perceive their advisers are doing.

For instance, clients feel returns are extremely important so they will rate that at the top. However, advisers rate that way below and rate helping the client to meet their goals as the topmost priority. Similarly, advisers feel behavioural coaching is one of the most important contributions that they can offer to their clients. However, clients feel this is not all that important put that way down their list.

Do Advisers know what clients want?

Bridging the gap.

This is a disconnect advisers need to understand and act upon. This will hugely impact their relationships with their clients.

  • Understand and Connect

It is important to connect with your clients at a deeper level so that they may understand their real intentions and motivations.

Advisers need to make the effort to move beyond the surface level where they discuss about finances, markets, goal funding, portfolios etc. It is then that advisors will be able to contribute meaningfully in areas of interest to their clients.  There are a whole lot of areas that clients need inputs on but do not know that their financial advisors can contribute!

Areas that are important for clients would include children’s education, career, taking care of aging parents, fulfilling retired life etc. When the advisor displays curiosity, deep interest and engages with the clients deeply in such areas, the relationship moves up to the next orbit. They are delighted and start showing more faith and trust in their advisors. This ensures that the clients stay with their advisors and ensures stability of the advisory practice. Also a fully engaged and happy client tends to refer more.

  • Referrals

Research shows that clients refer for reasons that are different from what advisors tend to think. Clients refer to help their near and dear ones. In a survey conducted in the US among investors, it transpired that 57% of the clients referred their advisor when their friend was in trouble, 48% referred their advisor when they were specifically asked for a recommendation & only 2% referred when the advisor asked for a referral. The reason why clients did not refer on their own is also because they were not aware of anyone who was looking for a financial advisor, while they should ideally be looking to refer those who may benefit from good advice!

We need to understand that just asking for referrals will hence not produce great results. We need to be on top of their mind when it comes to advisories so that when the time comes they will refer their advisor. It is also important that the client has the right information about our practices and would have the right client type to refer.

  • Deeper Engagement

It has also been found that client engagement activity like a survey/ interview has an excellent positive correlation with references. This is because this act demonstrates a sense of partnership and collaboration demonstrating commitment to the relationship.

Also, in this kind of survey, they will be pointed to the various activities the advisor does for them and will help them understand the panoramic scope of work they get from their advisor. In such a survey, if there is a question about referrals it sets them up to talk to those they care about with this top of the mind awareness.

Players in financial services are obsessed with investment products and their respective performance, the markets, the economy, and portfolio returns. But engaging clients is something we need to give a lot of thought to. Merely providing a roster of services we have committed will have clients who are merely satisfied. To drive more engagement with clients, we cannot add more services. That just would not help.

Clients may not want additional services, may not even have the time to avail them. They need a truly different experience in their engagement with the adviser and what they deliver.

Deeper engagement would produce more engaged clients and result in client delight, even enchantment. Also, the relationship itself would have shifted to a plane where trust rules and interactions are engaging and deeply meaningful in their lives. That would mean happy, aligned clients in advisory practices who will make the practice thrive and thoroughly enjoyable!

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