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How to Effectively Use a Client Advisory Board

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American Economic Planning Group is a high-end wealth advisory firm that does sophisticated financial planning. They are proud of how many variables they can track and how often they adjust client plans to account for changes in tax laws, client circumstances, economic factors, and others. So imagine their surprise when they asked on a recent client survey “when was your plan last updated?” and found that 30% of their clients responded “I don’t know.”

Surveys are an important component in the cycle of feedback central to running a client driven practice. While valuable, there are a few significant limitations to the instrument. Most responses are numeric ratings or rankings, or multiple-choice among some predetermined responses. Short answer questions frequently have a low response rate and too many of them will cause a respondent to quit the survey. Most important, the questions are short and fixed. Sometimes it is not clear how the client interprets it and sometimes the question is not quite what the client wants to give feedback on. And these limitations contribute to unexpected results. Like, among clients who really like your service, disliking a concept of the service you consider important. Or, answering “I don’t know” to a fundamental aspect of a core service.

So, one of the best ways you can utilize your client advisory board is to dig into some of those surprising answers and get more information from the clients about what they had running through their mind when they answered those particular questions.

The surveys I usually recommend “A” clients are part of the client engagement program of ActiFi. Like most surveys, many of their questions seek answers on a five-point scale from very dissatisfied to very satisfied, or strongly disagree to strongly agree. And some of the questions they can be especially valuable in exploring include:

  • My advisor adds value above and beyond investment performance
  • I have a clear plan in place to meet my goals
  • The range of services my advisor provides meets all of my financial needs
     

The ultimate objective of seeking client feedback and guidance and tailoring your strategy to maximize your value to clients is to reap more referrals. The most useful question on their survey, then, may be “have you referred someone to your advisor in the past 12 months?” Take the proportion of respondents who answered yes and compare it to the number of inquiries or phone calls you received who reported being referred by someone else (or to calls from clients suggesting you call one of their friends).

Julia Littlechild, in her ongoing research, finds that somewhere in the neighborhood of 30% of clients report having referred their advisor to someone in the preceding year, and that advisors receive enough inquiries to make it appear as though 2% of their clients have referred. If you look at the answer to that question on your client survey and then compare it to your own records of how many people called, you will probably find a similar relationship. But clients do not know the industry averages. So a great question we have used in many advisory boards that can lead more directly than most to additional referrals is “this is what our survey said and this is what we actually observe. Can you help us understand why those two numbers are so far apart? If you have referred someone in the past year, what were the circumstances? What were your expectations when you shared information about us? How did that interaction go?”

This can be a great way to talk about your desire to get more referrals, and to find out what you can do to get clients referring more frequently and effectively without actually coming out and asking them to do it. It can also yield some great ideas on generating more. I have seen advisory boards come up with ideas for cards clients can share with their friends, events advisors can invite clients and their friends to, and other novel strategies to encourage clients to engage in referral behavior.

If you have done a survey and received some responses you did not expect, what was your response? For many advisors I speak to, they attempt to interpret these results by hypothesizing what the clients meant when they answered the question. And when we have had the opportunity to test those ideas in a live conversation, we have frequently found that what was on the client’s mind was different than what the advisor guessed.

The active exchange of ideas in an advisory board meeting enables you to uncover differences in interpretation of questions between advisor and client. I am looking at one survey where the question “I am confident my long-term plan is on track” resulted in 38% responding “somewhat agree” and 11% answering “neutral.” What does it mean to be on track? An advisor and client may agree that a particular client’s saving rate will not get them to their goals but I would be shocked to find that advisor for whom 49% of clients fell into that category. This particular advisor believes that most all of his clients are on track for their goals. So why are 11% of his clients neutral on that statement? And what exactly does “somewhat agree” mean? What do clients believe is keeping them from being in strong agreement with that statement? What can the advisor do to help clients feel that they are more on track? And how can the action the advisor takes in response to that guidance increase loyalty and referrals?

Questions can lead to discussions on how to refine your service model. A typical survey item might be “my calls and emails are responded to promptly.” Assuming that 100% of your clients do not respond “strongly agree” your advisory board can provide you with some detail around what constitutes their idea of timeliness. Does it need to be same-day? Next day? If they left you a voicemail, is an email an acceptable response? Can you email that you are researching the item and will call them back when you have an answer?

Contrary to popular belief, a strategy of consistently delighting your clients is not the most effective means to increase loyalty or referrals. Consistently meeting expectations and fixing problems quickly and effectively when they arise are stronger drivers of loyalty. Of course, whether you seek to meet or exceed expectations your success will depend on how well you actually understand what those expectations are. A survey can give you a high level indication of how well you currently deliver what your clients expect. Digging into those responses, especially ones that surprised you, is the straightest path to providing your clients the experience they are hoping to find.

And that firm we mentioned at the beginning – what did they discover about clients who were not sure when their plan was last updated? The answer was surprisingly simple. As it turns out, several of the planners on the staff would discuss the specific adjustments they made to plans or portfolios based on items they were monitoring on behalf of the clients. Others made sure they referred to the plan overall before they communicated those adjustments. So the solution was no more complicated than being explicit at some point in the review meeting by saying “now let’s review how we have updated your plan.” They might pair that with delivery of a one page plan summary.

Attempting to respond to that surprising result could easily have created a redesign of the review meeting process or adding additional components to the presentation. As it turns out, a conversation with a select group of clients showed them that the solution was as simple as including one particular sentence at some point during the meeting. They saved themselves what could have been a lot of work while taking a concrete step to make sure that when clients talk to their friends they know exactly when their plan was most recently updated.

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