Driving Engagement; Driving Growth · Top 5 factors based on importance Rating out of 5 Working...

Driving Engagement; Driving Growth

Adviser ImpactDriving Engagement; Driving Growth 1

At Adviser Impact, we help advisers get back to basics – building deeper relationships and growing their

businesses. When we strip away the complexities of the market, the regulatory environment and the day

to day noise, these are the primary goals in any successful business.

And while the goals are simple, achieving them is not always obvious. For that reason, we conduct

on-going research among both consumers and advisers to understand:

• what drives client engagement and how advisers can use that information to build deeper and more

profitable relationships;

• how consumers perceive the value of advice and the implications of those perceptions for advisers;

• what consumers need, want and expect and how that impacts the adviser’s offer and service plan; and

• how consumers view referrals and what advisers can do to leverage client engagement to grow their

businesses.

This white paper is the third in a series, drawn from a large study among consumers of financial advice

from across the country. It is focused on the fundamental question of what is driving engagement and the

implications for advisers in running a great business.

We invite you to review the other white papers and a full summary of the research by clicking here. The

link will take you to the Vanguard Asset Management site to download the reports. Without their support

this research would not have happened; I thank them for their important contribution to the industry.

I would encourage you to take some time away from the business as you read this information. And

where you are tempted to skim over sections, think about if and how the drivers are engagement are

demonstrated in your business and where there is room for improvement. In addition to knowing you are

delivering an outstanding client experience, the economic benefits of client engagement are extraordinary.

It is worth the effort.

Julie Littlechild

President, Adviser Impact

www.adviserimpact.co.uk

https://www.vanguard.co.uk/adviser/adv/adviser-support/managing-your-practice.jsp


About Adviser Impact The research was conducted by Adviser Impact, a research and training firm dedicated entirely to

helping advisers ignite more engaged and profitable client relationships. In addition to conducting client

engagement research in the United Kingdom, Canada and the United States, Adviser Impact has surveyed

more than 100,000 consumers on behalf of financial advisers through its Client Audit programme. For

more information on the company, you are welcome to visit www.adviserimpact.com

About the ResearchThis white paper is based on a study conducted in partnership with Vanguard in September/October, 2011

via online survey. The study includes input from 601 investors across the United Kingdom, all of whom

work with a financial adviser, make or contribute to the financial decisions in the household and meet

specific asset criteria. Results are accurate with a margin of error of +/- 4.0%.

About the Participants The Economics of Loyalty is a body of research conducted every two years in three countries: the United

Kingdom, Canada and the United States. The study is designed to understand your deepest and most

profitable clients and help advisers to drive both engagement and growth.

0%

20%

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60%

£25k -£99k

£100k -£249k

£250k -£499k

£500k -£999k

£1M -£4.9M

£5M +

Total Household Assets

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A Higher Standard: Client Engagement

Engaged clients represent an adviser’s deepest and most profitable relationships. They sit at the

intersection of what is best for the client (because they are highly satisfied with the client experience)

and what is best for the adviser (because they actively contribute to the growth of the business through

referrals). As a result, they represent a new standard, something beyond satisfaction.

Traditionally, we think of high satisfaction as the ‘gold standard’ for client relationships. However, client

satisfaction is not tied to growth and does not tell us a great deal about the quality of relationships.

Through a process called cluster analysis, we grouped consumers based on the strength of three

factors: satisfaction, loyalty and referrals. The clusters represent four categories of clients: Disgruntled,

Complacent, Content and Engaged.

Satisfaction/Loyalty

Referrals

Disgruntled16%

Complacent30%

Content39%

Engaged15%


There are almost equal proportions of clients who are highly engaged and who

are disgruntled, the least satisfied and loyal. The proportion matters a great deal

because while disgruntled clients can be a net drain on growth (due to the threat

of attrition), engaged clients are the greatest source of potential growth. The

good news is that, based on this research, the growth potential of an engaged

client outweighs the potential that a disgruntled client will leave by a factor of

nearly 2:1. Why? Because when a disgruntled client leaves they typically take only

their own business elsewhere (unless, of course, they are negatively influencing

others). However, when a client is engaged he or she refers, on average, 2 clients

per year (1.94 to be exact).

Our focus, in this paper, is on the engaged clients, examining how we can engage more clients and how

we can leverage those that are already in that category. An observation on complacent clients, however,

may be in order. It could be argued that complacent clients represent a higher flight risk than disgruntled

clients. While the former are less likely to say they plan on leaving their adviser, they have, in many ways,

shut down. By way of example, disgruntled clients are more likely to say that they want to be asked for

their feedback on service. They have some fight left in them. Complacent clients may simply have given

up. Either way, nothing short of content is acceptable for any adviser hoping to create an outstanding

client experience.

Engaged clients are, by any definition, great relationships. The chart below tells the story. They are the

most satisfied, the most loyal and are driving referrals in the business.

Engaged clients are not only the most satisfied and loyal, but they provide virtually all referrals. In fact,

they don’t just provide one referral. Thirty-six percent of Engaged clients provided one referral, 41 percent

provided two referrals, 19 percent provided three referrals and 4 percent provided four or more referrals.

It is also important to note that Engaged clients recognise the value delivered by their adviser, relative

to the fees paid. In an industry which is undergoing a seismic shift with respect to fees, nothing is

more important than value, particularly during a down market. When clients think about fees, they are

Engaged clients

will drive most

of the future

growth in your

business.

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100%

Very satisfied(9 or 10)

Very loyal(5 out of 5)

Provided a referralin last 12 months

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5%

40%

58%

30%

0%

30%

74%79%

4%

20%

100%

0%

Disgruntled Complacent Content Engaged


Engaged

clients

recognise

the value of

advice.

Q. How would you describe the value that you receive from your adviser, relative to the fees paid? (a 5-point scale where 1 is completely disagree and 5 is completely agree)

comparing to value. The fact is that engaged clients are more likely to see higher value

relative to fees – somewhat more likely than content and dramatically more likely than

disgruntled and complacent.

Based on this information, it is clear that engagement matters. It matters because it sets a high standard

with respect to service and because it is directly tied to growth.

Taking ActionThe challenge, once we have identified the importance of engagement, is two-fold. How do we drive more

engagement and how do we leverage engagement to drive growth? The latter was specifically addressed

in another white paper entitled ‘Driving Growth through Client Referrals’. This paper focuses on how you

can drive deeper and more engaged relationships.

In order to understand engagement, we sought to understand what sets engaged relationships apart from

other relationships. When we compare engaged clients to disgruntled clients, it’s fair to say that they differ

in almost every aspect of the relationship. What does not typically differ—at least not as much—is what

is important to clients. By and large, investors are looking for many of the same things in an adviser, no

matter what their past experience, their wealth profile or their age. Topping the list of important attributes

are such things as trust, reliability and competence.

Top 5 factors based on importance Rating out of 5

Working with an adviser who is trustworthy. 4.71

Working with an adviser who is reliable. 4.59

My adviser has good knowledge about investment products and services. 4.60

The accuracy with which my account is handled. 4.52

My adviser fully understands my goals for the future. 4.46

The question is: what sets an Engaged client apart, even from a Content (and otherwise very satisfied)

client? What takes someone from “happy but passive” to actively helping you grow your business? We

turn to that challenge in the balance of this paper.

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100%

5%

Disgruntled

53%

Complacent Content

79%

66%

Engaged

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Client Engagement Roadmap

In order to put the findings related to driving engagement in practical context, we have created the Client

Engagement Roadmap – a plan to help you focus in on those things that help drive profound engagement

while taking a path that reflects your specific priorities. The map below shows the tactical path to

engagement. It starts with client feedback (Partner), which provides the insights to help you define your

ideal client (Fit), map out a meaningful client experience (Connect) and demonstrate true value (Lead).

The Roadmap was developed based on those aspects of the client experience that set Engaged clients

apart (Partner, Fit, Connect, Lead) and then broken down into the specific activities that will help you

execute.

Define feedbackobjectives

Choosemethod

Craftquestions

Gatherfeedback

Communicateresults

Fit Connect Lead

Define yourideal

Set minimumstandards

Createassessment

process

Define processfor prospectswho don’t fit

Define processfor clients who

don’t fit

Segmentclients

Define/structure

service offer

Analyzecapacity

Communicateplan

Trackperformance

Define yourrole with clients

Refine reviewprocess

Communicateprocess to

clients

Profound Engagement

Partner


Partner

Partnership is defined as giving clients a voice and inviting their input through feedback. Feedback creates

a sense of ownership among clients and can create a greater sense of personal control – something every

client needs when thinking about their finances.

Engaged clients are more likely to have been asked for their input on the service being provided.

While Engaged clients are more likely to have been asked for feedback, Disgruntled clients are looking for

the opportunity. More than half of Disgruntled clients feel it is important to be given the opportunity to

provide feedback, no doubt based on their service experience. Setting the most dissatisfied clients aside,

Engaged clients stand out, relative to Content or Complacent in the importance they place on feedback.

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27%

Disgruntled

51%

Complacent

43%

Content

60%

Engaged

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din

g ‘yes’

Q. Has your financial adviser ever asked you for feedback on the service that he or she provides?

Q. How important is it to you that your adviser asks you for feedback/input on the service that he or she provides?

0%

20%

40%

60%55%

Disgruntled

43%

Complacent

42%

Content

53%

Engaged

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When asked if feedback makes a difference, Engaged clients are optimistic that they are being heard and

Disgruntled clients do not believe they can impact the relationship. Engagement is not only linked to the

activity of asking for the feedback, but to the extent that advisers listen and respond to that feedback.

Partnership: Taking ActionImplementing a process to gather—and then actively use—client feedback is a

foundational step as it provides the insights you need to ensure that your plan is

meaningful and consistent with client expectations.

Activity Action Step

Define feedback objectives

Clearly define what you hope to accomplish through client feedback, which might include: demonstrating commitment, assessing satisfaction, understanding what is important to clients, refining your service offer, streamlining service delivery and increasing revenue or referrals.

Choose methodBased on your objectives, choose the most appropriate method to gather feedback. Those might include: written/online surveys, advisery boards or informal requests for feedback.

Craft questions

Create or select the questions that specifically align to your goals and are appropriate given the method you are using. Consider including questions that cover: satisfaction, priorities, service expectations, interest in additional services, comfort referring and other profile information.

Define processDecide if you will outsource your survey, then create a clear process and timeline.

Communicate results

Determine how you will follow up as it may impact what questions you ask. Consider a follow-up letter to all clients and addressing feedback directly during your next review meeting.

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Some difference A lot of difference

Disgruntled Complacent Content Engaged

15%

35%

18%

37%

29%

36%

48%

25%

Q. How would you describe the difference that providing that feedback made in helping your adviser shape the service that he or she delivers?


Fit

A majority of advisers report that ‘fit’ is somewhat or very important1, making the argument that if the

fundamental ‘fit’ is wrong, then there is little chance that a client will become engaged. The data shows

that clients also consider ‘fit’ to be important, with similar communication styles at the top of the list. The

chart below shows how clients rated the importance of different aspects of fit with their adviser.

Fit: Taking ActionWhile fit is clearly important for both clients and advisers, many advisers do not have a

clear process in place to assess fit. The action plan below is designed to help you think

about how you can define your ideal client and then connect that definition to your new

client on-boarding process.


Define your ideal client

Ensure that your definition of the ideal client captures all of those things that not only drive profitability but which you value the most.

Set minimum standards

Review your ideal client list and determine which are non-negotiable and which are “nice to haves”. If something is non-negotiable, you should have a defined standard when it comes to accepting new clients.

Create assessment process

Create a list of questions that will allow you to assess fit on those things that are non-negotiable.

Define process for prospects who don’t fit

If you are committed to saying ‘no’ when faced with a client who is not a perfect fit, decide in advance how you will communicate that and if/how you will help the client find the right solution.

Define process for clients who don’t fit

Consider your existing clients and determine if some do not fit. If so—and if you cannot see a way to create fit—then determine if/how you will transfer those clients to another adviser, where the fit may be better for both adviser and client.

Q. How would you rate the following aspects of fit in an ideal advisery relationship?

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60%

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100%

45%

13%

54%

20%

54%

35%

54%

15%

Sharedvalues

Personality EmpathyCommunicationstyle

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Somewhat important Critical

1 Adviser Impact/Vanguard, Driving Client Engagement, 2012


Connect

On average, Engaged clients both expect and receive more plan/portfolio reviews in a 12-month period.

Content and Engaged clients have similar wealth profiles so the difference in contact is not tied to the size

of the portfolio. The quality of the Engaged relationship, however, is different; they differ dramatically from

other clients as it relates to helping clients with the ups and downs of the market, defining long-term goals

and creating a clear plan for the future.

Connect: Taking ActionConnection is ultimately about crafting and delivering a client experience that is

meaningful to clients, based on their needs and expectations. That service plan must

also be profitable for your business.


Segment clients based on value

Design, refine and maintain a segmentation process that reflects the full value of your client relationships, which might include: assets, revenue, potential, referrals and time required to service.

Define/structure service offer

For each client segment, define: the range of services that you provide, frequency of contact, educational support and appreciation activities.

Assess capacityDo the math, taking into account the number of clients you have, the service standards you have set and the resources you have in place.

Communicate plan

Map out service standards and then create a formal process to share those with clients so that they are clear on what they will receive and you have reinforced that value time and again.

Track performance

Automate a process to be able to check that contact goals have been met, with a focus on using technology.

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60%

Number of reviews per year

Content EngagedComplacentDisgruntled

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31%

25% 24%

13%

32%

41%

50%

45%

39%

10%

21%

17%

3%

9%

27%

14%

Once Two or three times Four or more times Did not meetwith adviser

Q. Thinking about the last 12 months only, how often did you actually meet with your adviser (either face-to-face or by telephone) to review your financial plan or portfolio?


Lead

Leadership, particularly during turbulent markets, plays an important role in

engagement. Seventy-six percent of clients say that leadership is important in a

relationship with a financial adviser. This need for a strong leader in their financial

lives cuts across demographics, including wealth profile and age.

While it is the most intangible of the engagement drivers, leadership is,

nonetheless, critical. It is primarily demonstrated during the client review and the

extent to which you focus clearly on the needs of the client, face up to the most

difficult situations, provide reassurance as needed and keep your client focused

on making the difficult decisions he/she may need to make to secure an ideal

financial future.

However, this attribute is also linked to being ‘proactive’ which ties back to the fundamentals of client

contact, defining service standards and communicating those clearly so the client understands your

process and knows that you are focused on their plan even when they are sitting across the desk at a

review meeting.

More than three-quarters of Engaged clients see their adviser as a strong leader, most often described as:

• Helping keep a plan on track despite turbulence

• Keeping clients focused on the long term

• Actively reviewing plans in the face of a market downturn

Leadership is also demonstrated by the role an adviser plays in the role of a client’s life, which goes beyond

investments for the most engaged clients. Based on the data, there are three ways in which advisers can

practically demonstrate leadership, either because they are focusing on the issues which are most critical

to clients or because they are playing a role that puts them in the position of “trusted adviser”. The three

elements described on the following pages reflect ways in which an adviser can demonstrate leadership.

76% of clients

say that

leadership

is somewhat

important or

critical.

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40%

60%

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100%

14%

Disgruntled

56%

Complacent

58%

Content

77%

Engaged

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Q. Do you consider your adviser a strong leader?


1. Engaged clients are more likely to put their adviser in the role of ‘trusted adviser’.

Most high net worth clients have complex financial needs and work with a

variety of advisers—including accountants and solicitors—in delivering those.

And most look for one of those professionals to play the lead role – the one

trusted adviser who understands the full financial picture. Engaged clients are

more likely to say that their adviser plays that role.

2. Engaged clients are more likely to have a financial plan

An indication of the depth of the engaged relationship is the extent to which

they buy into the financial planning process. For many advisers this will be

an indication that they are focused on all aspects of their financial lives, a

further sign of the depth of the relationship. Ninety percent of Engaged clients

say the plan is somewhat important or critical in helping them reach their

financial goals.

Engaged clients

see their adviser

as their most

trusted adviser.

Engaged clients

receive more

holistic planning.

Q. Which, if any, of the following best describes the role that your financial adviser plays relative to other professional advisers with whom you work (e.g.: accountant or solicitor): in my financial life, coordinating or working with my other professional advisers as and when required.

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Disgruntled

16%

Complacent

30%

Content

34%

Engaged

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Q. Do you have a written financial plan which may include insurance, tax planning, retirement planning, estate planning or some combination of these items?

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20%

40%

60%

29%

Disgruntled

38%

Complacent

43%

Content

59%

Engaged

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wit

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wri

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pla

n


3. Engaged clients work with their adviser on a multi-generational basis.

Engaged clients are twice as likely as content clients to bring their families

into the relationship, a clear indication of a deeper trust and a driver of

longer-term profitability.

Lead: Taking Action


Define your role with clients

Clearly define the role you will play with clients as it relates to their financial lives, considering the scope of your role across other professionals and the family as well as how you would define strong leadership.

Refine review process

Refine the client review to ensure you are actively focusing on the relationship in addition to the plan or portfolio.

Communicate process to clients

Communicate your role and your process for focusing on the relationship so that clients recognize the importance you place on leadership.

Engaged

relationships

cross

generations.

0%

20%

40%

60%

4%

Disgruntled

6%

Complacent

10%

Content

24%

Engaged

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Q. Does your primary financial adviser work with other immediate family members other than yourself and/or your spouse? Yes, with children. n=clients with adult children


Your Engagement Plan

It’s time to take action.

As you read this report, you may have thought that the research validated what you already felt, but

perhaps did not fully understand: that growth is driven by a relatively small group of your deepest and

most engaged relationships. By understanding that fact, you can begin to focus on the core drivers of

engagement in order to push more clients up the spectrum. The simple beauty of the strategy is that

in doing so, your clients have a fundamentally richer client experience and you reap the benefits of the

associated growth potential.

Now is the time for action. To start, you may want to reflect back on the Roadmap provided on page six

and create your plan of action. The Roadmap identifies the core strategies, tactics and activities, all of

which are explained in more detail throughout the report. In thinking about how to start, consider your

own strengths and weaknesses relative to each of the proposed tactics and then create a more defined

timetable. The table below may help you move forward toward increased engagement.

Activity Next Steps Responsibility Timeline

Partner

Define feedback objectives

Choose method

Select questions

Gather feedback

Communicate results

Fit

Define your ideal

Set minimum standards

Create assessment process

Define process for prospects who don’t fit

Define process for clients who don’t fit

Connect

Segment clients

Define/structure service offer

Analyze capacity

Communicate plan

Track performance

Lead

Define your role with clients

Refine review process

Communicate process to clients

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