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Affluent Loyalty Index

Client loyalty has become a key issue within the financial services industry. Finally it appears to have replaced the tired old "client satisfaction" standard for measuring client relationships

Baltimore: "We're always striving to improve our level of service," explained Susan, then adding "but we aren't comfortable with the data we're getting from our firm's client satisfaction surveys. Do you have any suggestions that would help ensure the loyalty of our affluent clients other than simply asking our clients 'What can we be doing better?'"

Susan's question hit a nerve. Client loyalty has become a key issue within the financial services industry. Finally it appears to have replaced the tired old "client satisfaction" standard for measuring client relationships. But the lines of distinction between loyalty and satisfaction continue to blur. And the idea of your firm collecting accurate information regarding your affluent client relationships is absurd. Your firm can assist in a broader context, but getting true feedback from your affluent clients is your job.

We have developed a simple Affluent Loyalty Index that, if used properly, can be very useful in strengthening loyalty and penetrating affluent centers-of-influence. I often refer to this as a compact to emphasize the importance of listening to the feedback and acting on it. This cannot be simply a ploy to generate good-will with the hope of getting referrals. You must think of this as a combination of a feedback tool and a compact you are making your top clients.

It is essential that your affluent clients understand that this process is not some home-office impersonal questionnaire, but rather you asking them to help you better serve them. Our Affluent Loyalty Index has a total of 21 statements, of which I'm going to share seven to give you a feel for the exercise, and then explain how to proceed. At the conclusion of this e-letter you will be instructed on how to get a PDF file of the entire index, if you're interested.

Affluent Loyalty Index (partial list)

5 = strongly agree; 4 = mildly agree; 3 = neutral; 2 = mildly disagree; 1 = strongly disagree

  1. We listen carefully to all of your needs and concerns.
  2. Our level of personal service is consistent and meets the Ritz Carlton standard.
  3. We communicate clearly and avoid industry jargon.
  4. All paperwork is delivered when and where you want it with a FedEx level of efficiency.
  5. All phone calls are answered promptly, professionally, and courteously.
  6. You always receive a return phone call in a timely manner.
  7. We continually exceed your expectations regarding our professional relationship.

Using this loyalty index with all of your clients is recommended only IF all of your clients are affluent. This is why we've labeled it the Affluent Loyalty Index. Having loyal clients is an admirable accomplishment for any financial advisor, but you will create ongoing practice management headaches if too many of these loyal clients are of smaller revenue status.

For most financial advisors the hard reality is that their book runs the gamut from smaller households that are no longer wanted, to middle tier clients who aren't affluent but still generate some revenue, to affluent households that generate the lion's share of the overall production. This process of obtaining honest feedback is most useful when applied to your top affluent clients.

Why? Because our research clearly states that loyal affluent clients have a statistically significant impact on affluent client acquisition. Satisfied affluent clients do not, while smaller loyal clients rarely have affluent centers-of-influence for you to penetrate. The secret of this index is not simply getting high marks. We all like to hear positive feedback, but advisors make a serious mistake when they attempt to steer the responses. What you are asking for is constructive feedback that will assist you in providing more value and a higher level of service.

Now here's the catch; you had better act on the feedback. The idea is to use this as a tool that enables you to place a laser-like focus on the needs and perceptions of your best clients. I recognize all of this might sound like common sense, but I can assure you that it isn't common practice.

Following our conversation, Susan was all set to go off and solicit feedback from all of her clients. This is when it dawned on me that concepts like client segmentation, inventory, and net-profit contribution analysis have yet to become working processes for a number of financial advisors. For too many, all of this is still merely in the concept stage.

Once you have gathered feedback by completing the Affluent Loyalty Index with your best clients (top 25), take the following steps…

  • Hold a team meeting to discuss all the feedback.
  • Determine areas that require immediate corrective action.
  • Assign individual responsibility for each area (many areas will require everyone's participation).
  • Develop clear action-steps for each corrective area that are complete with a timeline for execution / completion.
  • Establish a system for measuring improvement per area
  • Determine areas of strength.
  • Assign individual responsibility for strengthening areas of strength (like areas needing correction, this will likely involve everyone's participation).
  • Communicate your corrective actions to your affluent clients and thank them for helping you better serve them.

Let me repeat: In order for this process to effectively strengthen the loyalty of your affluent clients, it must be executed with the purest of intentions. You must be open to hearing things you don't like or necessarily agree with. Remember, your top clients are always right! This process then enables you to make the concept of ongoing affluent client-centric improvement a core part of your business. You will continue to earn, deservedly so, their loyalty.

Although this appears to be focused exclusively on feedback from your best clients, this index will become a platform upon which you can build your Rainmaker process. Loyal affluent clients are very amenable to allowing you to penetrate their centers-of-influence. A note of caution, do not ask for referrals or introductions while gathering this feedback. This rings hollow and serves to weaken the purity of your intentions.

If you want the full version of our Affluent Loyalty Index, click here for a FREE pdf file. Also, if you brought in 10 or more $1 million-plus clients over the past year and want to participate in one of our current research projects, visit 2007 Rainmaker Best Practices.

Once again, we want to thank all of you who have emailed comments and questions to us. We will continue to do our best to answer each one. If you have any topic suggestions or special requests, please contact Rich Santos, publisher of Registered Rep. and Trust & Estates magazines, at [email protected].

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