The best client relationships are built on clear communication
CEG Insights is an organization that provides financial advisors with information and intelligence through thought leadership and research. In December, they released a research report that all advisors should read.
The report is titled “Addressing the Gap Between Investors’ Expectations and Advisor Services”. It compares the services clients expect, and their assessment of whether they’re receiving those services to the services advisors believe they deliver to their clients.
One of the critical findings from the report is that while the respondents may be receiving the services they expect, a high percentage of them don’t believe they are. To understand the importance of the investor feedback included in this research, let’s look at what clients said about the two services they expect most: financial planning and investment management.
Financial planning is a fundament service you provide as a financial advisor. In the research, 92% of investors indicated that they expected to receive financial planning from their advisors. The financial advisors reported that they provided financial planning 95% of the time. In this example it appears that investor expectations are being met, yet almost 60% of the investors felt they were not receiving financial planning. Investment management is another fundamental service. Like financial planning, a high percentage of those researched (92%), expected investment management services, and almost all the advisors (98%) believed they provided their clients with investment management advice, yet only 73% of investors felt they’d received those services. Finally, CEG’s research reported that 92% of clients were looking for wealth transfer advice, but only 17% of respondents felt they had received the service.
History has demonstrated that the best time for financial advisors to grow their business exponentially is when “money is in motion”. Now is that time. Today, we are in the early stages of the “Great American Wealth Transfer,” where $84.4 trillion will pass from the Silent and the Baby Boomer generations to their heirs between now and 2045. After a lifetime of accumulating assets, your clients want the financial legacy they build to benefit current and future family generations. Clients who are guided through the wealth transfer process by an experienced advisor are likely to achieve those goals. Yet, in the CEG survey, they don’t believe they’ve received that advice. To bolster those findings, in a recent Edward Jones and Morning Consult survey, 71% of respondents reported they are comfortable having the wealth transfer discussion with their heirs, but only 27% have followed through.
Here are some ideas that would help bridge the gap between what investors expect, their understanding of the services they’re receiving and the services their advisors are delivering.
Clients
- Be thoughtful when choosing your financial advisor. The relationship with your financial advisor should last for years and must be grounded in trust.
- Be clear about your expectations. Tell your advisor precisely what you need. Be specific about your concerns and the issues you want to discuss. Fifty percent of ensuring your expectations are met is your responsibility.
Advisors
- Make sure your clients understand the services you offer. Carefully explain your services, using language that’s more generic than branded because services often have names that aren’t descriptive.
- Remind them of the services they’re receiving on an ongoing basis.
- Borrow ideas from other professionals. Have you ever noticed that
other professionals always seem to have a rack on the wall with brochures explaining their services? You can do that too. Advertise your services in your reception area, conference rooms, and individual offices. - Finally, have the wealth transfer conversation with all of your clients and prospects, not just the wealth holders in a family. The older individuals you interact with need direction and don’t know how to begin the discussion with their heirs. The younger people wonder what their parents and grandparents are doing or have done to ensure their futures are secure.
As with all relationships, success is achieved when all parties involved communicate frequently, establish trust, and plan for the future.
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