​Formalizing client communications

​Formalizing client communications

​Formalizing client communications New research out of the U.S. suggests advisers are not taking the necessary steps to communicate effectively with clients. Such is the conclusion in the recently released 2014 Trends in Client Communication Study from the FPA Research and Practice Institute.

According to the study there is a “major gap" in today's financial advisory businesses around communications with the spouses and children of boomer clients.  
"Baby Boomers and retirees are target clients for many advisers," says Valerie Porter, director of the FPA Research and Practice Institute. "To offset client and asset attrition inherent in that group, advisers would be wise to build relationships with that group's survivors, and to diversify their practices with younger clients to ensure the long-term viability of their businesses."

That is, as primary family contacts age and die, advisors need to have communication with the rest of the family to ensure those business lines continue. “Advisers may be doing themselves a disservice by not insisting on meeting with their clients and their spouses/partners,” according to the report. “When the ‘financial spouse’ passes away, the ‘non-financial spouse’ may choose to take their assets to another adviser or to someone with whom they have established rapport.”

Putting that theme into numbers:

The study finds that 18% of advisers say that fewer than half of their married clients meet as a couple and 48% say that fewer than three quarters of their clients meet as a couple.

A minority of advisers (42%) are proactively trying to attract younger prospects and even fewer (34% ) are proactively working to build relationships with the children of existing clients.

“Without a focus on building relationships with the younger professional/family or the adult children of existing clients, many advisers are going to fall short on building profitable businesses for the long-term,” according to the report.

Also in the report is an analysis of the “formalization” of communications—are there explicit rules and procedures for communicating with clients? Interestingly, it seems female advisors do a better job of this.  

Fifty-six percent of advisors have formally defined service standards in place, which, according to the report “might include such things as frequency of contact or response time to clients.” Female advisers are somewhat more likely to define service standards (66 percent) compared to men (53 percent).

Only 30 percent of all advisers indicate that they review and reinforce service standards, with their clients, on an on-going basis; 44% say they communicate them when the client starts to work with the firm.

Sixty-eight percent of advisors say they gather feedback from clients in some form, with informal feedback as the primary method. Female advisers and younger advisers (under age 40) are more likely to gather feedback from clients (77%) compared to male advisors (65%).

Larger businesses are more likely to define service standards; 64 percent of those with $250m+  in assets under management say they do.

In firms with multiple advisers, 56 percent say the standards are consistent across all advisers. Of those advisers who do formally define service standards, just under half (46 percent) have a process in place to track if they have effectively delivered on those standards; another 41 percent indicate they have an informal tracking process.