The Affluent Relationship Shift (2nd Macro Shift)

In our latest affluent investor study we segmented the advisor-client relationship into two categories

Nashville—“How important do you think it is for our support personnel to be involved in helping manage the business and social components of our client relationships?” Jerry asked with a perplexed look on his face. “My assistant is terrific in a reactive manner, handling incoming calls and so on, but are you suggesting she become proactive? If so, how?”

This was a good question, but it reflected more on Jerry’s relationship with his affluent clients than with his support team. His relationship with his affluent clients was predominately business. There were a few clients whom he occasionally invited to an event, but these events weren’t held frequently, his primary assistant was not involved, and not many clients attended. Yet, the second affluent macro shift is all about the type of relationship financial advisors (and staff) develop with their affluent clients. Obviously, Jerry was doing something wrong—he didn’t really have a personal relationship with his top clients and had never really made the effort to develop this type of relationship.

In our latest affluent investor study we segmented the advisor-client relationship into two categories:

· Purely Business
· Business-Social

We then ran a multi-variant analysis for all of our findings, including the criteria our affluent respondents ranked as extremely important. What we discovered was an eye-opener—expectations were met more frequently when our affluent respondents had both a business and social relationship with their primary financial advisor. Another surprise was the magnitude of the impact this broader relationship had in different areas of financial services. For instance:

Creating and executing an up-to-date financial plan
· Purely business relationship: advisors not meeting expectations.
· Business-social relationship: advisors meeting expectations.

I’ve outlined a couple other areas our affluent respondents ranked extremely important, to help explain why we consider the expansion of the advisor-affluent client relationship to be a macro shift. Take notice of the disparity between business only and business-social relationships in meeting expectations:

Possessing a full breadth and depth of industry knowledge
· Purely business relationship: advisors not meeting expectations.
· Business-social relationship: advisors exceeding expectations.

Clear and timely communication
· Purely business relationship: advisors not meeting expectations.
· Business-social relationship: advisors meeting expectations.

Our findings outlined above, plus others that I don’t have space to share with you in this issue of Practice Management, make it obvious to us that today’s affluent investor wants more than just a business relationship with their financial advisor. Why, you might ask. Much of it has to do with the trust deficit that has grown as this Great Recession continues to linger. When we get to know someone on a personal level, we feel as though we know the person better. The better we know them, the more we trust (or distrust) them.

Today’s affluent aren’t as concerned with how smart you are (you better be everything you represent yourself to be), since they’ve seen a lot of smart financial people rip off affluent investors. And this goes far beyond Madoff. They want to feel as though they know you on a personal level so they can determine what type of a person you are. If you pass their “good person” sniff test and you’re a true professional advisor, you’re in. They trust you and your recommendations.

For many advisors this will be a sea change. It will be necessary for advisors and their staff to spend more time socially with their affluent clients. For advisors who already interact with their affluent clients socially, it’s important to include both spouses.

In today’s environment, the trust issue is critical; it can never be assumed, and it has a direct impact on an advisor’s ability to meet the expectations of today’s affluent investor. Advisors who fail to take either of these macro shifts seriously (gender and relationship) while working with today’s affluent will find themselves vulnerable. Not only will they find themselves challenged in strengthening the loyalty of their affluent clients, they will also find themselves handicapped when it comes to acquiring affluent clients. How so? Word-of-mouth is the most dominant element in affluent spheres of influence.

Responding to these shifts should not be overly complicated. Regarding the Affluent-Advisor Relationship Shift, meet with your team and assess the nature of your team’s relationship with each of your top clients. When did you last meet with them face-to-face? Were both spouses involved? Have you ever done anything non-business with them? Has your support staff ever interacted with them socially? If so, what was the event and how long ago did it occur? Do you know their passion points? And finally, how well do your affluent clients know you on a personal level?

I’m sure you get the idea. Once you’ve profiled your top clients in this manner, you’ll want to get out your calendar and begin to schedule, at least on paper, your “developing a social relationship” campaign. Getting back to Jerry’s initial question, support personnel can help in this process in small ways. They can extend every client call with a bit of personal conversation, ask about the client’s family, talk about their own family, and gather any additional personal information that might be useful in surprising and delighting this affluent client in the future.

This is real-world affluent relationship management.

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