The financial advice business with the evolution of technology is moving so fast that it’s a little bit like a rodeo ride. Advisors are meeting with clients through screens, and they are demanding more mobile and flexible work arrangements. Paperless transactions have become routine. And the standard three-meeting closing process, a longstanding fixture of the client-advisor relationship, is being swept away before our eyes.
An advisor who time traveled to the present from, say, 2005 would be shocked to find closings taking place after one conversation—or even none at all. We are seeing consumers check out an advisor’s website one day and sign a contract as quickly as the same day. Chalk it up to the pandemic and advances in technology, which have combined to disrupt consumer behavior and expectations in ways that will prove hugely beneficial for financial advisors who quickly adapt to the changing landscape.
So what should firms do in order to facilitate the quickly shrinking courtship timeline? While it’s early, we have already identified some successful practices among firms in our consulting network. But first, let’s look at the history of how organizations have turned prospects into clients.
Twenty to 25 years ago, independent financial advice was unfamiliar territory for most Americans, and the less wealth they had, the truer that was. Convincing prospects to entrust their money to a new advisor required a lengthy campaign of education and persuasion.
To get them comfortable with opening an account, advisors took their prospects through a three-meeting process. The first was about getting to know each other and about the advisor’s value proposition—typically financial planning, investing and perhaps some basic tax services. The next was typically a presentation of how the advisor would invest the client’s money and help them plan for retirement. The purpose of the third meeting was to dispel doubts, answer questions and, hopefully, seal the deal. Essentially, prospects were inched along toward making a commitment.
Advisors in this era used a loss-leader approach; they might have turned to investment management software to build an asset allocation to compare current positions and costs with recommended positions and cost reductions, and/or might have put together a detailed financial plan to present to the client. During the period of low consumer awareness, all this up-front work and investment was table stakes if advisors hoped to convince clients to move some or all of their assets to the new firm.
Over the years, public awareness about the business of independent financial advice grew. Less time was needed for education and persuasion, and the three-meeting close in some cases became a two-meeting process. In more recent years, it’s sometimes required just one face-to-face meeting. The need to do up-front loss-leader work for free has dramatically declined.
Then came the COVID-19 pandemic, which accelerated advisors’ adoption of technology and transformed consumers’ expectations, information consumption approach and behavior. At the same time, a new wave of clients sought out independent advice from humans. Some of these clients migrated from robo advisors, some from brokerage firms, some from the do-it-yourself world. They wanted handholding during the market’s fluctuations, and they had questions about cryptocurrencies, private offerings and new ways to invest.
As these trends unfolded, the way advisors sold their services to consumers, and how they closed the relationships, changed in tandem. Investors are often committing to an advisor in one meeting or, as we’ve increasingly seen in 2021, even without a face-to-face meeting. As unlikely as it would have been just a few years ago, today you will find consumers watching an online presentation, sending an inquiry about how to become a client, and receiving instructions on opening an account, all within a couple of hours.
Now, ultra-quick closes are still the exception rather than the norm. But they won’t remain that way for long. As I wrote in my last column, the culture of convenience and speed is here to stay. And hiring an advisor to give advice is the new frontier.
All of this raises the question of how financial advisors can position themselves to gather clients quickly, in many cases completely virtually, and often without having much of an in-depth conversation. While it’s too early to offer a definitive playbook, we can share what we’ve seen working, at least for now.
One thing that’s clear is that digital client experience is critically important in the world of rapid closing. When a consumer first reaches out to an advisory firm for help, they are receptive to replies for about 90 minutes. If you wait to reach out to the prospect after that window has closed, your chances of making them a client slip away rapidly by the minute.
In today’s convenience culture, consumers either want to see their problems solved right away or, in the case of financial advice, to quickly see the path to getting what they want. Forward-leaning wealth management firms are setting up systems in which clients who digitally connect, via, say, a calendar button, or direct messaging platforms, immediately receive a link to a video. That video explains the firm’s service offering, process and client experience, clearly and succinctly outlining the steps that will take the prospect to the outcome they’re seeking.
Do these videos provide immediate gratification? Do they immediately give the prospect what they’re ultimately seeking? No. What they can do is to get the prospect engaged, so that they’re beginning to form an association with your organization. Once the prospect has viewed the video, a clear, immediate next step is available to them. This may be scheduling an appointment, filling out a “goals” worksheet and/or gathering data via a secure link. The goal is to get the client taking some sort of action so they feel like they are moving forward.
In other words, today’s consumers want to move fast and those who are able to get concrete steps and action items to get started on get connected to a firm faster. Twenty years ago, the cycle from making initial contact to signing a contract was a month to a month and a half. The cycle time now is 3 1/2 days. Organizations must align their client experience with this new reality.
The informational video, outlining the client experience, is a step in that direction. But behind that video must be a modern digital client experience. One of the biggest mistakes firms make when building a digital client experience is failing to consider cycle time. Financial advisors are still building client experiences that are too slow and dense, that send prospects searching for a faster advisor.
Right now, organizations should be thinking through the operational details of how to close in 3 1/2 days. But the entire client experience should move faster as well: Accounts paperwork needs to be completed within a couple of weeks, for example. And advisors should always have enough free bandwidth to react to impromptu client inquiries. Which means, advisors must have some slack in their capacity to react to the changing demand of the consumers. Advisory firms running their advisors at 100% full capacity in today’s environment are holding back their ability to react when those prospects roll in.
The old, slower-paced norms might feel more comfortable to many industry veterans. But there’s no stopping change, and the rapidly shortening timeline for closing new clients is a prime example. Organizations that fully accept and embrace this change have a golden opportunity to accelerate their growth.
Angie Herbers is the founder and CEO of Herbers & Co, a consultancy firm for financial advisors.