The relationship between a financial advisor and a client is the crux of this industry. That may sound trite, but it's true.
Success as a financial advisor lies in the ability to quickly build strong relationships with good clients. Securing new clients is most of the battle, but keeping them and convincing them to give you referrals is the rest.
Once an advisor works hard to obtain a new client, the last thing he wants is to lose the client to a competitor. The competition in the financial planning space is fierce and seems to get tougher every year as advisors become better marketers and new firms are created.
As with any industry, all that competition gives the customer more power. The average client in our industry has hundreds of firms and thousands of advisors to choose from. There are about 300,000 advisors in the country who are actively prospecting for new clients. In a major city, there may be as many as 5,000 to 7,000 advisors. Given this competitive landscape, an advisor has to be on top of her client acquisition-and-retention game.
The most common way advisors grow is through referrals from their existing client base. This growth is typically slow because they don't have a plan. Here at the Rummage Group, we stress the importance of having a written plan.
Success in most endeavors in life comes from having a plan and sticking to it. Relationship building is no different. You must know what you are trying to achieve as well as the necessary steps to get there. So we challenge advisors to write a business plan and stick to it for at least six months.
If we know that success as a financial advisor lies in your ability to secure new clients as well as getting referrals from them, the next obvious question is: Why would a client choose you? And then, Why would they stay?
The answer is simple: Because of your relationship.
So what makes a good relationship? Likability is the number-one reason a client does business with you. There are four major things that go into your success as an advisor: likability, knowledge, trust and service. We can argue over the order of importance of the last three, but there is no doubt that likability comes first.
Likability is a powerful idea (After all, it's what makes con artists successful.) More generally, it makes people look past an individual's weaknesses and negative personality traits.
Likability makes a presidential candidate win an election. Consider that for just a moment. The most likeable and charming candidate usually wins (Obama over McCain and Romney; Bush over Gore and Kerry; Clinton over Dole; Reagan over Carter.)
If you were to put politics aside and ask yourself which candidate you would rather have a beer and watch a game with, I'll bet most people would choose those winning candidate.
So if a presidential candidate can win the White House based on likability, then a financial advisor can build her book the same way.
Let's look at a few specifics that an advisor can do to build strong lasting client relationships resulting in more referrals.
• Get personal. Be genuinely interested in your client; if not, at least become a good actor. People like to feel you care about them. Ask open-ended questions about them and their families. A lot of advisors sit down at an initial client meeting and immediately start talking business. But this sets the tone with the client that you want the relationship to be purely professional. In any professional relationship there is a wall between the two parties, but in a personal relationship the emotions take over. If an advisor cares about his client and becomes interested in them, he will win them over very quickly. I know this is hard for some personality types, so they will have to work at it a little harder.
• Go home. Visit them at their house or at least outside of your office. The human mind has a lot going on subconsciously. This is why when you meet a coworker for the first time outside of work it is a little awkward. Your mind is telling you the situation is off. When you see the person at work the next morning you feel a little closer to them. This is because you met them on the same turf you typically meet friends. When you meet with a client where they usually meet friends and family, the relationship will get much stronger automatically.
• Give to get. There have been many books written on the rule of reciprocity. The thing you need to know is that giving your clients small gifts makes them feel you care about them. It also makes them feel that you listen to what they tell you. It can be something bigger like a client-appreciation event or smaller like a magazine subscription to their favorite magazine. You could buy them a neat cooking tool because you know they love to cook or send them an interesting article on surfing because they like to surf. It's not the size of the gift that counts. Remember the old saying, "It's the thought that counts."
• Be fun and interesting. For some people it is natural to be fun, upbeat and interesting. Others have to work at it. But nobody likes an overly serious individual so when dealing with clients remember to smile and laugh. Keep the conversation fun and interesting. Believe it or not, some people find financial planning boring and stressful. If you can make the client relax, you will win a lot of relationship points.
• Make time for face time. It is vital that you have face time with your clients. The biggest mistake most advisors make is not having enough face time with their clients. If a picture says a thousand words, face time says ten thousand. All advisors should call every client at least twice a year and have at least one face-to-face meeting. If your client is too small to deserve this treatment, then give them to an advisor who will make the time. Most of us meet our friends dozens of times a year. Since clients pay your mortgage and can give you referrals, you need to give them face time too.
Being a financial advisor is a very unique profession. It's one of the only businesses where you can get an annuitized stream of cash flow once you secure a client. It's also one of the few businesses where it gets easier as your client base grows. This being the case, advisors should work hard to keep their relationships strong.
You have the ability. The question is, will you take the time to do it?
Rick Rummage is the founder and CEO of the Rummage Group. He can be reached at [email protected]