How do you get a great advice relationship off on the right foot? Macquarie’s 2018 Propensity advice client research discovered three essential elements that clients want from their advisers in their first year with you to give them confidence they made the right decision – even before they get any financial results.
Sherise Mercer, Head of the Macquarie Virtual Adviser Network, says long-term and first year clients differ in the criteria they use to judge their experience with their adviser. “Our in-depth analysis of thousands of advice clients shows significant differences between these two groups. Today, the number one priority for long-term clients is to feel their adviser values their business and relationship with the firm. Whereas, first year clients look at the relationship from a different view point.”
“In the critical first year of an advice relationship, many clients are sceptical or uneasy – worried they might have entrusted their financial wellbeing to the wrong person. They can’t evaluate the quality of your advice yet, so they look for clues that you understand them, are paying attention and know what you’re doing.”
According to Mercer, the Propensity advice client research shows first year clients want:
- The right level of information about their financial status and progress – “Year-1 clients need constant, relevant information at a level they can understand and consume easily. If you’re executing a strategy, keep them up to date and informed, with relevant digestible pieces of information.
It’s critical to engage at their level of financial literacy. While some clients want a complex, 300-page stock report, many will feel more comfortable with a meaningful, one-page summary relevant to their affairs.
Never send information without a covering note explaining why you’re sending it. Does the client need to do anything or is it just for their information and records? If the latter, tell them so: ‘This is why we are sending this information. Please keep it on record. The most important points are…’
If you’re sending generic information, like a newsletter – tell them what to read and why. Not pointing this out can cause them to focus on issues that don’t relate to their situation causing undue stress and inefficiencies.
Consider your clients’ level of financial literacy and don’t send them information that might worry or confuse them. Empower them with information that’s directly relevant to their situation – that will help them make better decisions.” - Proof that advisers (and their support teams) pay attention to detail – “In the first year, clients won’t give you the benefit of the doubt. A keystroke error – spelling their street name incorrectly or getting a figure wrong – can cost you a client.
In the early months, paperwork is the only thing new clients can use to judge how well you listen and whether you’re prone to making mistakes. In their minds, if they can’t trust you to fill in basic details, how can they trust you with bigger issues? Administrative mistakes, that a long-term client would easily forgive, might be a red-flag for a new client. Trust will be lost in a heartbeat – and clients will walk. - Advisers who give them confidence and are clearly knowledgeable– “This is less about credentialing and more about being able to describe and articulate strategy and advice in a way the client can comfortably understand. That means, every conversation has to pass the ‘pub test’. Don’t use jargon or baffle them with sophisticated strategies. Clients need to understand:
- Why are you recommending they pursue this strategy and not another one?
- Why is it in their best interest?
- What regulatory, tax and investment factors are in play (beware of dumbing it down too much)?
If a new client can confidently articulate all that to friends and family afterwards – you’ve done a great job. If they walk out thoroughly confused – that’s a fail.
New clients need to feel empowered to play a role in the decision-making process. They should feel they are participating in advice, not just receiving it. That’s what inspires confidence – when they can follow the logic of your advice and aren’t simply taking your word for it.”
Mercer says that, if advisers can retain a client’s trust through the first year, the satisfaction equation begins to change. “Once clients can see the results of your advice, they’re less easily spooked by errors. Receiving the right level of information remains critical – and clients also want to feel confident that their adviser is proactively managing their affairs. But now clients are more interested in feeling valued. You still have to work at the relationship, but it’s moved on to a different level, where clients are looking for engagement at a deeper level.”
