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Survey Says: To Get More Assets, Do Well for Current Clients

When it comes to investing, the bottom line for your clients is, well, the bottom line.

When it comes to investing, the bottom line for your clients is, well, the bottom line. They want positive results, naturally, and they want a good relationship with you. Sounds obvious, right? Still, you might be surprised at how important satisfying client demands is to your business.

J.D. Power & Associate’s 2006 Full-Service Satisfaction Survey takes a look at overall satisfaction of clients with their firms. And, yes, most of J.D. Power’s results speak for themselves—their portfolio’s relative importance is the most important factor for overall satisfaction ( click here to see full results, including firm rankings). But advisors may be interested to know that their “highly committed” clients are 12 times more likely to bring in new assets than “lower committed” clients.

Highly committed clients generally have had a better experience with the advisor/firm, according to the survey. More importantly, such clients are not only 33 percent less likely to switch firms than lower-committed clients, but they are also more likely to recommend the advisor and/or firm to friends and family.

The hard part now is getting that highly committed client. Russ Alan Prince, market researcher and consultant with Prince & Associates, says, “What’s essential in attaining such a relationship is understanding the clients. And this is where advisors tend to fail first.”

Prince explains that most clients come to advisors with problems that need to be solved (saving for college or retirement) rather than a truck full of money that needs to be invested. Instead of listening to what the client needs first, Prince says, advisors tend to focus on managing the assets before analyzing the client’s problems. “You can’t do anything effectively without knowing what the client is all about, but, unfortunately, the advisement industry is about managing money,” he says.

Sounds crazy, but Prince has found that too many advisors tend not to understand their clients’ needs. If you understand your clients’ needs, they’re happier and more loyal to you as a result. This translates into more assets and more referrals. A look at Registered Rep.’s September 2005 cover story “You Say, They Say” shows highly satisfied clients are much more likely to give an advisor more money to invest than a moderately satisfied client, 94 percent compared with 13 percent.

In a way, your “highly committed” clients are more valuable than you think. James Lohmann, senior director of investment services research at J.D. Power, says, “They tend to use more of your services, are more likely to recommend you and they are doing the marketing for you to friends and family.”

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