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What A Commitment The Client Experience Reveals About Your Wealth Advisor

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When asked why it’s important for financial advisors to continually invest in their customer experience, most people would point to the advisor’s ability to retain client relationships over time by engendering loyalty and a high level of customer satisfaction. However, there’s another reason that should be just as important to you as a client: The ability for your advisor’s practice to thrive and grow. Below, we look at why this matters to you as a client and the role a well-honed customer experience plays in helping to ensure your advisor remains focused on your needs and goals, rather than the distractions that come with managing day-to-day business operations.

What is CX?

According to Microsoft’s state of global customer service report, 95% of survey respondents indicated that customer service is “important to their choice of and loyalty to a brand.” There’s a good reason for that. A company’s customer service experience—often referred to as “CX”—reflects what they value most. It speaks to the brand image they want to convey to the marketplace and their long-term vision for the business. It helps to answer the question: Do they value client loyalty? Are they willing to put the time and effort into developing meaningful relationships over time, or are they simply focused on increasing revenue by driving more and more new business through the door? More importantly, how do these choices impact you as a client?

A new study provides insight that may be helpful for answering these questions and more. New research conducted by customer experience advisory firm Watermark Consulting analyzed shareholder returns for wealth managers that inspire client raves versus rage. It reveals the significant payoff (and penalties) associated with the quality of the customer experience in today’s wealth management marketplace. The research indicates that admired brands with strong consumer feedback ratings enjoyed an average total shareholder return that was more than 170 points higher than firms with weaker ratings, revealing something that Main Street and Wall Street can agree on: A great wealth management customer experience helps build business value, while a poor one erodes it.

“Over the long-term, wealth management firms with a positive client experience are seeing shareholder returns that are on average 7.4 times greater than their less customer-centric competitors,” said Jon Picoult, founder of Watermark Consulting. “That disparity in financial returns has nearly doubled over the past few years, widening the performance chasm between firms that lead in customer experience versus those that lag.”

Picoult’s research finds that this trend rings true for advisors operate their own privately-owned firms, as well as those who are affiliated with publicly traded firms. However, many wealth managers remain reluctant to invest in a better client experience, questioning its return on investment. Picoult counters that the payoff from a great wealth management client experience is far from intangible. “It’s material and real,” he said. “If wealth managers should be struggling with any question, it’s not ‘What’s the case for customer experience?’ but rather, ‘What’s the cost if we do nothing?’”

Why this should matter to you

Doing nothing has tangible outcomes. We witnessed at the onset of the COVID-19 pandemic in 2020. Firms that did not have the right technology and delivery platforms in place struggled to meet client needs during the lockdown and for months afterward. On the other hand, those who had made important investments in technology over the years benefited by having more streamlined and scalable business models in place, which made it easier to adapt during the pandemic. Firms with e-signature, video conferencing, e-communications and digital marketing capabilities in place found it easier to transition to a virtual environment with little to no impact to their client service standards. Connectivity for advisors and staff associates also became critical for seamlessly meeting client needs as remote work became the norm. This required secure and reliable access to back-office, marketing, compliance, trading and operational systems.

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Firms that were unable to quickly pivot during the early days of the pandemic likely experienced delays in responding to client inquiries or delivering on client needs, which in a best-case scenario can leave clients feeling frustrated and underserved. In a worst-case scenario, the inability to effectively communicate with clients, especially during periods of increased market volatility, can lead to clients taking matters into their own hands and making emotionally based decisions. That can result in selling at the wrong time, thus solidifying losses and missing opportunities later as markets rebound.

The extent to which advisors are willing to invest in their businesses has a direct impact on the client experience in good times as well as during challenging periods for the markets and economy. The failure to invest in the resources and technology required to streamline processes designed to enhance the client experience also creates a self-fulfilling prophecy. A lack of capital investment makes it harder to attract and retain qualified and experienced associates to deliver on high service standards, which can result in high turnover among employees, as well as lost clients.

Eventually, an inconsistent or inadequate client experience will result in lower profit margins as the firm becomes less competitive in attracting and retaining high-value client relationships. That leaves less money available to make capital investments in the business to improve the client experience, leading to even greater client attrition. All of this adds up to a huge distraction for advisors. Instead of focusing on helping clients make important decisions aligned with their financial goals, more and more of their time and attention is directed toward keeping the business afloat, with a focus on acquiring new clients to fill the void left by clients exiting the firm. And that can be a costly endeavor since it can be at least five times more expensive to attract a new customer than to retain an existing client.

These are among many reasons why the customer experience provided by the wealth management firm you choose to work with is so important. You want to ensure that the firm has the infrastructure in place to serve your needs today and is committed to investing in the resources needed to continually improve your experience—and their business—over time.

What should you expect from your advisor?

Whether you have questions about your existing advisor’s client service offering, or are in the process of finding a new advisor or team to work with, consider asking the following questions:

  • Can you describe your end-to-end client service offering, including your communication strategy, expectations for regular meetings and other touchpoints?
  • What aspects of customer service have you struggled with in the past and what have you done to overcome these challenges?
  • What capital improvements have you made in your firm over the past 3 – 5 years, and how do clients benefit from these investments?
  • What types of future improvements do you plan to make and what is the timeframe for each?
  • What does your new client onboarding process entail?
  • Once I become a client, how often will we meet in person or virtually, and what will those meetings cover?

If an ensemble or team practice:

  • Will the advice I receive consistently reflect the collective knowledge and experience of the full team?
  • Will I be provided a single point of contact who will coordinate the advice and services I receive?
  • Will I have direct access to financial specialists if I have questions or concerns?

To learn more about the client experience you should expect from your advisor, download our free guide: 10 Questions to Determine if Your Advisor Meets Standards.