Financial professionals are quick to judge client quality by assets under management or revenue generated but Wells Fargo executive Wayne Badorf believes there’s a better way to qualify client loyalty.
Simply ask yourself five specific questions for each client. The answers when culled together will tell you a lot, but not everything, about a client’s loyalty.
How long has your client been with you?
If you’ve been through 2008 with a client and they’re still with you, that’s good. If your client’s been with you through 2008 and 2000-2002, that’s great. Sticking with you through the good times and bad no matter their investable assets is a reminder why you’re happy to have them.
What percentage of your client’s investable assets do you manage?
If your client’s got accounts all over town it might be an indication they don’t completely trust you. On the flipside, if your client asks for your advice on matters where you clearly can’t benefit financially, it’s a sign that they value your advice and consider you invaluable to their financial success.
Does your client support your recommendations?
The worst kind of client is one where you invest a great deal of time and energy putting together a plan only to find them going to other advisors for second and third opinions. Even if they ultimately choose to work with you, it’s likely they’ll consider moving their assets at some point in the future.
Does your client provide you with referrals?
According to asset management research firm Cerulli Associates, 41 per cent of new clients come from personal referrals from family and friends while only 15 per cent come from professionals such as lawyers and accountants. Building your business is incumbent upon personal referrals. If your client’s not forthcoming, you might want to ask yourself why?
Has your client introduced you to family?
It’s estimated that just two per cent of children keep their inheritances with their parent’ advisor. With $41 trillion expected to pass from one generation to the next in the U.S. over the next 50 years it’s quite likely you’ll be part of the 98 per cent on the outside looking in.